THE COMMISSIONER OF INCOME T vs. M/S COIMBATORE POLYTEX P LTD

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TCA/785/2019HC Madras18 October 2019Bench: Hon`ble The ACTING CHIEF JUSTICE4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. The learned Senior Standing Counsel for the Revenue brought to the court's notice CBDT Circular No.17/2019 dated 8th August 2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs.1,00,00,000/-. In the present case, the tax effect was stated to be less than this monetary limit. Consequently, the High Court dismissed the appeal filed by the Revenue as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Coimbatore, filed a Tax Case Appeal before the High Court of Judicature at Madras. The appeal challenged an order passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai, dated 13.10.2006, concerning Assessment Year 1984-85. The assessee is M/s. Coimbatore Polytex (P) Ltd. The appeal was filed under Section 260A of the Income Tax Act. The High Court was to decide substantial questions of law related to the computation of deduction under Section 80HHC.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in holding that excise duty and sales tax are not to be included in the total turnover while computing deduction under Section 80HHC? 2. Whether, on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in treating the scrap sales as a part of total turnover for the purpose of deduction under Section 80HHC? 3. Whether, on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in not considering the explanation (BAA) to Section 80HHC which clearly excludes 90% of any receipts by way of brokerage, commission, interest, rent, charges or any other receipts of similar nature included in such profits? The Revenue raised these questions. The judgment does not record specific arguments made by the assessee or the Revenue on these issues, other than the Revenue's counsel bringing a CBDT circular to the court's notice.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC

AI-generated summary — verify with the full judgment below

Judgment dt. 18.10.2019 in TC(A) No.785 of 2019 CIT v. Coimbatore Polytex (P) Ltd IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 18.10.2019 CORAM : THE HON'BLE DR.VINEET KOTHARI, ACTING CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case (Appeal) No.785 of 2019 The Commissioner of Income Tax Coimbatore. .. Appellant -vs- M/s.Coimbatore Polytex P Ltd 244, ATD Street, Race Course Coimbatore – 18. .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai dated 13.10.2006 passed in I.T.A.No.1869/Mds/06. For Appellant : Mr.T.R.Senthilkumar Senior Standing Counsel Assisted by M/s.K.G.Usharani Junior Standing Counsel J U D G M E N T (Delivered by The Hon'ble Acting Chief Justice) This Tax Case Appeal has been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, dated 13.10.2006, in I.T.A.No1869/Mds/06, for the Assessment Year 1984-85, by raising the following substantial questions of law: __________ Page 1 of 4 http://www.judis.nic.in Judgment dt. 18.10.2019 in TC(A) No.785 of 2019 CIT v. Coimbatore Polytex (P) Ltd "(i) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in holding that excise duty and sales tax are not to be included in the total turnover while computing deduction under 80HHC? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in treating the scrap sales as a part of total turnover for the purpose of deduction under 80HHC? (iii) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in law in not considering the explanation (BAA) to Section 80HHC which clearly excludes 90% of any receipts by way of brokerage, commission, interest, rent, charges or any other receipts of similar nature included in such profits.” 2. When the matter is taken up for hearing, learned Senior Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). 3. In the instant case, the tax effect is said to be less than the monetary __________ Page 2 of 4 http://www.judis.nic.in Judgment dt. 18.10.2019 in TC(A) No.785 of 2019 CIT v. Coimbatore Polytex (P) Ltd limit imposed and therefore, the Appeal filed by the Revenue is dismissed, as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs.

(V.K.,ACJ.) (C.S.N.,J.) 18.10.2019 Index : Yes/No kst To: Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai __________ Page 3 of 4 http://www.judis.nic.in Judgment dt. 18.10.2019 in TC(A) No.785 of 2019 CIT v. Coimbatore Polytex (P) Ltd The Hon'ble Acting Chief Justice and C.Saravanan, J. KST T.C.(A) No.785 of 2019 18.10.2019 __________ Page 4 of 4 http://www.judis.nic.in

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