THE COMMISSIONER OF INCOME T vs. M/S.NUMERIC POWER SYSTEMS LT

T.C.A.Nos.834 & 835 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.11.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.Nos.834 & 835 of 2019 and C.M.P.No.23526 of 2019 The Commissioner of Income Tax, Chennai. ... Appellant in both the appeals Vs M/s.Numeric Power Systems Ltd., No.5, Numeric House, P.S.Sivasami Salai Mylapore, Chennai 600 004. ...Respondent in both the appeals COMMON PRAYER: Tax Case Appeals filed under Section 260A of Income Tax Act, 1961 against the order dated 05.04.2011 in ITA Nos.139 & 140/Mds/2011 on the file of the Income Tax Appellate Tribunal Chennai 'A' Bench for the assessment years 2005-06 & 2006- 07. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel. 1/6 http://www.judis.nic.in T.C.A.Nos.834 & 835 of 2019 For Respondent : Mr.M.P.Senthil Kumar. C O M M O N J U D G M E N T (Order of the Court was delivered by N.KIRUBAKARAN, J) These tax case appeals have been filed against the order of the Income Tax Appellate Tribunal confirming the order of the Commissioner of Income Tax who in fact adopted the methodology by which the expenditure incurred by the manufacturing unit at Pondicherry has been reduced. 2.The respondent company is engaged in the business of manufacturing and trading of un-interrupted power supply (UPS) Systems at Pondicherry. It has also got a manufacturing unit at Chennai. The assessee filed an assessment clubbing both the amounts of the manufacturing unit at Pondicherry and trading unit at Chennai. The assessing officer computed the allocated expenses in such a way that the income of the Pondicherry unit i.e. manufacturing unit is reduced having effect of Section 18 1 (A) of the Act. Resultantly tax effect is gone in respect of the Pondicherry unit and is completely exempted from tax under Section 18 1 (A) of the Act. 2/6 http://www.judis.nic.in T.C.A.Nos.834 & 835 of 2019 3.Against the said order, an appeal has been preferred before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax reversed the order of the assessment officer on the ground that the allocation of expenses is not correct since the assessment officer fixed all the expenses only in respect of the manufacturing unit. The said order has been confirmed by the Tribunal. Hence, against the order of the Tribunal, the present appeals have been filed. 4.These appeals are admitted on the following substantial question of law; “(i)Whether on the facts and in the circumstances of the case, the Income Tax Tribunal was right in holding that the method of allocation of common expenditure adopted by the CIT(A) is correct when there is no legal sanction for the same nor any data of details provided on the basis of which it could have been framed?"

3/6 http://www.judis.nic.in T.C.A.Nos.834 & 835 of 2019 5.Mr.Karthik Ranganathan, learned Senior Standing Counsel appearing on behalf of the appellant would submit that the tax effect in this case is less than Rs.1 crore and is covered by Circular No.17/2019 dated 08.08.2019 issued by the Director, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, Delhi. As per the said circular, the monetary limit to file an appeal before the High Court is fixed at Rs.1 crore. In this case, tax effect is less than Rs.1 crore and therefore, the appeals have to be dismissed. 6.This Court perused the circular dated 08.08.2019 and Paragraph No.2 of the Circular, which prescribes monetary limit for filing appeal. Paragraph No.2 is usefully extracted as follows: "2.As a step towards further management of litigation, it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows: 4/6 http://www.judis.nic.in T.C.A.Nos.834 & 835 of 2019 S.No. Appeals / SLPs in Income-tax matters Monetary Limit (Rs.) 1. Before Appeallate Tribunal 50,00,000 2. Before High Court 1,00,00,000 3. Before Supreme Court 2,00,00,000" 7.In view of the submissions made by the learned counsel appearing on behalf of the appellant and also in view of the Circular No.17/2019 dated 08.08.2019 issued by the Director, Central Board of Direct Taxes, Delhi, these Tax Case Appeals are dismissed on account of tax effect. However, the substantial question of law framed is left open. In the event the tax effect is above the limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. Consequently, connected miscellaneous petition is closed. (N.K.K.,J.) (P.V.,J.) 15.11.2019 ay To The Commissioner of Income Tax, 5/6 http://www.judis.nic.in T.C.A.Nos.834 & 835 of 2019 Chennai.

N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay

T.C.A.Nos.834 & 835 of 2019 and C.M.P.No.23526 of 2019 Dated:13.11.2019 6/6 http://www.judis.nic.in