COMMISSIONER OF INCOME TAX vs. M/S.NARAYANA GURUVIAH CHETT

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TCA/837/2019HC Madras22 November 2019Bench: Hon`ble Mr Justice N. KIRUBAKARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal on the ground of tax effect. The Court noted the submission by the Revenue's counsel regarding Circular No. 17/2019 dated August 8, 2019, which stipulates a monetary limit of Rs. 1 crore for filing appeals before the High Court. As the tax effect in this case was stated to be less than Rs. 1 crore, the appeal was dismissed in accordance with the circular. The Court explicitly stated that the substantial questions of law framed were left open. Liberty was granted to the Revenue to mention the case for restoration if the tax effect is found to be above the limit fixed in the circular, to be heard and decided on merits. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed a Tax Case Appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated January 9, 2015. The ITAT had dismissed the Department's appeal against an order of the Commissioner of Income Tax (Appeals), which had allowed the assessee's appeal. The assessee is M/s. Sri Narayana Guruviah Chetty Estate, and the assessment year in question is 2010-11. The appeal before the High Court challenges the ITAT's decision regarding the assessee's entitlement to exemption under Section 11 read with Section 2(15) of the Income Tax Act, 1961, concerning income from running kalyana mandapams.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for exemption under Section 11 read with Section 2(15) of the Act, even though one of the objects of the trust was running of kalyana mandapams and the assessee had commercially rented out its kalyana mandapams for consideration? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for exemption under Section 11 when Section 2(15) of the Act defining charitable purpose clearly mandates that advancement of any other object of public utility shall not be a charitable purpose if it involves carrying on the activity of commercial nature or any activity in relation to trade or commerce for any consideration, irrespective of the use of the said income? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The learned counsel for the appellant (Revenue) submitted that the tax effect in this case is less than Rs. 1 crore and is covered by Circular No. 17/2019 dated August 8, 2019, issued by the CBDT. As per this circular, the monetary limit for filing an appeal before the High Court is Rs. 1 crore. Therefore, the appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 2(15)

AI-generated summary — verify with the full judgment below

T.C.A.No.837 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.11.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.No.837 of 2019 Commissioner of Income Tax, Chennai. ... Appellant Vs M/s.Sri Narayana Guruviah Chetty Estate, No.49, Varadhamuthiappan, Chennai - 600 001. [PAN: AAATS2241R]

...Respondent PRAYER: Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against the order dated 09.01.2015 in I.T.A.No.2272/Mds/2013 on the file of the Income Tax Appellate Tribunal Chennai 'A' Bench for the assessment year 2010-11. For Appellant : Mr.J.Narayanasamy 1/6 http://www.judis.nic.in T.C.A.No.837 of 2019 J U D G M E N T (Judgment of the Court was delivered by N.KIRUBAKARAN, J) This tax case appeal has been filed against the order of the Income Tax Appellate Tribunal dated 09.01.2015 passed in I.T.A.No.2272/Mds/2013 in dismissing the appeal filed by the Department of Revenue against the order of the Commissioner of Income Tax (Appeals) by which the appeal filed by the assessee was allowed. 2.Heard Mr.J.Narayanasamy, learned Counsel for the appellant. 3.This tax case appeal is admitted on the following substantial questions of law: "(i)Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessee is entitled for exemption u/s 11 read with Section 2 (15) of the Act even though one of the objects of the trust was running of Kalyana mandapams and the assessee had commercially rented out its kalyana mandapams for consideration? 2/6 http://www.judis.nic.in T.C.A.No.837 of 2019 (ii)Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessee is entitled for exemption u/s 11 when the Sec.2 (15) of the Act defining charitable purpose clearly mandates that advancement of any other object of public utility shall not be a charitable purpose if it involves, carrying on the activity of commercial nature or any activity in relation to trade or commerce for any consideration, irrespective of the use of the said income?" 4.Mr.J.Narayanasamy, learned 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 appeal has to be dismissed. 3/6 http://www.judis.nic.in T.C.A.No.837 of 2019 5.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: 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" 6.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 4/6 http://www.judis.nic.in T.C.A.No.837 of 2019 Direct Taxes, Delhi, this Tax Case Appeal is dismissed on account of tax effect. However, the substantial questions of law framed are 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. (N.K.K.,J.) (P.V.,J.) 22.11.2019 ay To Commissioner of Income Tax, Chennai.

5/6 http://www.judis.nic.in T.C.A.No.837 of 2019 N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay T.C.A.No.837 of 2019

Dated:22.11.2019 6/6 http://www.judis.nic.in

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