COMMISSIONER OF INCOME vs. SHRIRAM RETIL HOLDINGS

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TCA/868/2017HC Madras12 August 2020Bench: THE HON'BLE DR.JUSTICE VINEET KOTHARI5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court observed that the present appeal filed by the Revenue had become infructuous. It noted that the matter had been remanded by the ITAT to the Assessing Authority, who passed fresh orders. Subsequent appeals were dismissed, and the matter was again pending before the ITAT for a second round of litigation. The Court acknowledged the Revenue's submission regarding Question No. 3, but also noted the assessee's submission that all issues were decided against the assessee and were at large before the Tribunal. Given that all issues were open to be argued again before the ITAT, the High Court declined to answer the substantial questions of law at that stage. The appeal was disposed of as infructuous, leaving it free for the parties to agitate the matter before the learned Tribunal.

What were the facts?

The Revenue (Commissioner of Income Tax) filed an appeal before the High Court against an order of the Income Tax Appellate Tribunal (ITAT) dated 10.08.2016, which was passed in ITA No.885/Mds/2015. The assessee was Shriram Retail Holdings Pvt Ltd. The ITAT's order had remanded certain issues back to the Assessing Officer. Subsequently, the Assessing Officer passed fresh orders on 29.06.2017. An appeal against these fresh orders was filed before the appellate authority and was dismissed on 31.01.2019. The matter was then pending before the ITAT for a second round of litigation. The Revenue contended that one specific issue (Question No. 3) was not remitted back and the ITAT's finding on it was against the Revenue. The assessee argued that all issues were decided against them by lower authorities and were pending before the ITAT.

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 to a deduction under Section 14A and directing the Assessing Officer to re-examine the disallowance of expenditure under Section 14A read with Rule 80, considering investment activity and business objects while computing the disallowance? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is eligible for a claim of short-term capital loss with respect to a forfeited amount spent for acquiring the right to purchase shares, even though the assessee had not acquired any capital asset or shares? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that expenditure computed under Section 14A read with Rule 80 for earning exempt dividend income cannot be added to the book profit computation as per Section 115JB, despite Clause (f) to Explanation 1 to Section 115JB specifically providing for such an addition? Assessee's Contention: The matter stood remanded by the Tribunal to the Assessing Authority, who passed fresh orders. Appeals against these orders were dismissed, and the matter is pending before the Tribunal for the second round. Therefore, the Revenue's appeal has become infructuous. Revenue's Contention: Question No. 3 was not remitted back to the Assessing Authority, and the Tribunal's finding to exclude the addition under Section 14A while computing book profits under Section 115JB is against the Revenue and contrary to the Act.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB

AI-generated summary — verify with the full judgment below

Judgment dated 12.08.2020 in TCA No.868 of 2017 (CIT -Vs- Shriram Retail Holdings Pvt Ltd) IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.08.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.868 of 2017 Commissioner of Income Tax, Chennai. ... Appellant -Vs- Shriram Retail Holdings Private Limited,(Since Amalgamated with Shriram City Union Finance Ltd) NO.4, Mookambika Complex, Lady Desika Road, Mylapore. Chennai 600 004 ... Respondent Prayer :: - Appeal filed against the order of the Income Tax Appellate Tribunal, Madras D Bench, dated 10.08.2016 in ITA No.885/Mds/2015. For Appellant : Mr.J.Narayanaswamy, Senior Standing Counsel For Respondent : Mr.R.Sivaraman J U D G M E N T (Judgment of the Court was delivered by Dr.Vineet Kothari,J) The Court was held by Video Conference as per the Resolution of the Full Court dated 03 July 2020, by Judges at the respective residence and the counsel, staff of the Court appearing from their respective residences. Page 1 / 5 http://www.judis.nic.in Judgment dated 12.08.2020 in TCA No.868 of 2017 (CIT -Vs- Shriram Retail Holdings Pvt Ltd) 2. This appeal has been filed by the Revenue against the order dated 10.08.2016, raising the following purported substantial questions of law before us. “1.Whether on the facts and in the circumstances of the case the tribunal was right in holding that assessee is entitled for deduction u/s 14A and directing the assessing officer to re-examine the issue of disallowing of expenditure u/s 14A r/w r 80 in the light of the investment activity and directed to consider the expenditure from the assessee's business object and activity while computing the disallowance u/s. 14A? 2. Whether on the facts and in the circumstances of the case the tribunal was right in holding that the assessee is eligible for the claim of short term capital loss with respect to the forfeited amount spent for acquiring the right to purchase the shares and even though the assessee had not acquired any capita asset I shares.? 3. Whether on the facts and in the circumstances of the case the tribunal was right in holding that expenditure computed u/s 14A r w R 80 for earning exempt dividend income cannot be added to the book profit computation as per section 115JB even though clause (f) to expn 1 to sec 115JB specifically provides for such addition.? Page 2 / 5 http://www.judis.nic.in Judgment dated 12.08.2020 in TCA No.868 of 2017 (CIT -Vs- Shriram Retail Holdings Pvt Ltd) 3. Heard Mr.J.Narayanaswamy, learned counsel for the appellant Revenue and Mr.R.Sivaraman, learned counsel for the respondent assessee. 4. However, it is submitted by the learned counsel for the respondent Assessee that the matter stood remanded back by the learned Tribunal to the Assessing Authority with regard to the issues under Section 14A of the Act as well as calculating book profits under Section 115JB of the Act and upon such remand, the Assessing Authority has passed fresh orders on 29.06.2017 and against the said order of the Assessing Authority, an appeal was filed before the appellate authority and the same was also dismissed vide order dated 31.01.2019 and therefore, the matter is again pending before the learned Tribunal for the second round of litigation. He, therefore, submitted that the present appeal filed by the Revenue has become infructuous. 5. Learned counsel for the appellant Revenue however sought to submit that Question No.3 was not remitted back to the Assessing Authority and the findings of the learned Tribunal to exclude the addition under Section 14A of the Act while computing book profits under Section 115JB of the Act, is against the Revenue and is contrary to the provisions of the Act. Page 3 / 5 http://www.judis.nic.in Judgment dated 12.08.2020 in TCA No.868 of 2017 (CIT -Vs- Shriram Retail Holdings Pvt Ltd) 6. However, learned counsel for the respondent Assessee submitted that these issues have also been decided by the lower authorities against the Assessee and the matter is at large before the learned Tribunal. 7. We are of the opinion that the present appeal filed by the Revenue, therefore, has become infructuous and since all the issues are open and at large to be argued again before the learned Tribunal in the second round of litigation as aforesaid, we decline to answer the questions involved in this appeal at this stage, leaving it free for the parties to agitate the matter again before the learned Tribunal. 8. With these observations, the present appeal by the Revenue is disposed of as infructuous. No costs. (V.K.,J.) (K.R.,J.) 12.08.2020 KST/kpl To Income Tax Appellate Tribunal, Madras D Bench, Chennai. Page 4 / 5 http://www.judis.nic.in Judgment dated 12.08.2020 in TCA No.868 of 2017 (CIT -Vs- Shriram Retail Holdings Pvt Ltd) Dr.VINEET KOTHARI, J. and KRISHNAN RAMASAMY, J. KST T.C.A.No.868 of 2017 12.08.2020 Page 5 / 5 http://www.judis.nic.in

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