COMMISSIONER OF INCOME TAX vs. B.NAGI REDDY

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TCA/8/2015HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn. This decision was based on the submission by the revenue that the tax effect in the appeal was less than the monetary threshold of Rs. 1,00,00,000/- stipulated in CBDT Circular No. 17/2019. Consequently, the revenue stated it would not pursue the appeal. The Court explicitly noted that the substantial questions of law were kept open for determination in an appropriate case. No decision was made on the merits of the substantial questions of law raised.

What were the facts?

The Commissioner of Income Tax, Chennai (appellant/revenue) filed a Tax Case Appeal under Section 260-A of the Income Tax Act, 1961, against the order dated 22.08.2014 passed by the Income Tax Appellate Tribunal (ITAT), Madras “B” Bench, in ITA No.2278/Mds/2013. The appeal pertained to Assessment Year 2006-07 and concerned the respondent, Shri. B. Nagi Reddy. The High Court admitted the appeal on substantial questions of law on 11.02.2015. During the proceedings, the revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The revenue submitted that the tax effect in this appeal was below this threshold.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the ITAT was correct in holding that the reopening of assessment was bad in law, without considering the Delhi High Court's judgment in Dalmia (P) Ltd. V. CIT (348 ITR 469)? (Question of law) 2. Whether the ITAT was correct in holding that 'undertaking' includes 'individual' for the purpose of claiming deduction under Section 80IB(10) of the Income Tax Act? (Question of mixed law and fact) 3. Whether the ITAT was correct in deleting the addition of Rs. 25 lakhs, which the assessee admitted during survey proceedings as additional cost of improvement for flats constructed by him? (Question of mixed law and fact) Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that the ITAT's findings on the reopening of assessment, the interpretation of 'undertaking' for Section 80IB(10) deduction, and the deletion of the Rs. 25 lakhs addition were incorrect. The revenue also relied on the CBDT Circular No. 17/2019 regarding the monetary limit for pursuing appeals.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80IB(10)

AI-generated summary — verify with the full judgment below

TCA.No.8 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No. 8 of 2015 The Commissioner of Income Tax, Chennai

.. Appellant Versus Shri.B.Nagi Reddy, New No.34, Flat B, Nu-Tech Arcade Building, Ground Floor, I Avenue, Ashok Nagar, Chennai 600 083

.. Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras “B” Bench, dated 22.08.2014 passed in ITA No.2278/Mds/2013 in respect of Assessment Year 2006-07. For Appellant : M/s. Karthik Ranganathan & S. Rajesh Standing Counsel 1/4 https://www.mhc.tn.gov.in/judis TCA.No.8 of 2015 JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) This Tax Case Appeal has been filed by the appellant / revenue, questioning the correctness of the order dated 22.08.2014 passed by the Income Tax Appellate Tribunal Madras “B” Bench in ITA No.2278/Mds/2013 for the Assessment Year 2006-07. 2. On 11.02.2015, this tax case appeal was admitted by this Court on the following substantial questions of law; ' 1. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the reopening of assessment is bad in law without appreciating the Delhi High Court judgment in the case of Dalmia (P) Ltd. V. CIT (348 ITR 469)? 2. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that 'undertaking' includes 'individual' for the purpose of claim of deduction under Section 80IB(10) of the Income Tax Act? 3. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in 2/4 https://www.mhc.tn.gov.in/judis TCA.No.8 of 2015 deleting the addition of Rs.25 lakhs, which were admitted by the assessee during the survey proceedings as additional cost of improvement of flats constructed by him?” 3. When the matter was taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, 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). It is also submitted that the tax effect in this appeal is less than the threshold limit. 4. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. [R.M.D,J.] [M.S.Q., J.] 26.08.2022 3/4 https://www.mhc.tn.gov.in/judis TCA.No.8 of 2015 msr

Index : Yes / No R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr To 1. The Income Tax Officer, Business Ward-IV (4), Chennai 600 034. 2. The Commissioner of Income Tax (Appeals)-IV, Chennai. 3. The Income Tax Appellate Tribunal Madras “B” Bench Chennai, T.C.A.No. 8 of 2015 26.08.2022 4/4 https://www.mhc.tn.gov.in/judis

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