COMMISSIONER OF INCOME TAX vs. M/S.TAMILNADU SMALL

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TCA/883/2015HC Madras25 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The High Court dismissed the appeal as withdrawn. The dismissal was based on the submission by the Revenue that the tax effect in the appeal was less than the threshold limit of Rs. 1,00,00,000/- stipulated in CBDT Circular No. 17/2019. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. Therefore, there was no decision on the merits of the substantial questions of law regarding the allowability of provision for leave salary under Section 43B(f). No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Company Circle III, Chennai, filed a Tax Case Appeal under Section 260A of the Income Tax Act, 1961, against an order dated December 19, 2014, passed by the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Chennai. The appeal pertained to the assessment year 2006-07 and challenged the ITAT's decision regarding the allowability of provision for leave salary. The High Court admitted the appeal on substantial questions of law. Subsequently, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals with a tax effect not exceeding Rs. 1,00,00,000/- should not be filed or pursued. The Revenue submitted that the tax effect in this appeal was below the threshold limit.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was correct in holding that provision for leave salary is allowable expenditure even if not actually paid before the due date of filing the return of income, contrary to Section 43B(f) of the Income Tax Act, 1961. 2. Whether the ITAT was correct in ignoring that Section 43B(f) was introduced by the Finance Act, 2001, effective from April 1, 2002. Contentions: Assessee: The judgment does not record any specific contentions made by the assessee. Revenue: The Revenue contended that the ITAT's decision was against Section 43B(f) of the Income Tax Act, 1961, and that the Tribunal erred in ignoring the effective date of the said section. The Revenue also relied on CBDT Circular No. 17/2019, stating that the tax effect in this appeal was less than the prescribed monetary limit for pursuing appeals before the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 43B

AI-generated summary — verify with the full judgment below

T.C.A.No.883 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 25.08.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.883 of 2015 The Commissioner of Income Tax Company Circle III Chennai

.. Appellant Vs. M/s.Tamil Nadu Small Industries Corporation Ltd. Thiru Vi Ka Industrial Estate Guindy, Chennai 600 032 .. Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 19.12.2014 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.1565/Mds/2014. For Appellant : Mr.M.Swaminathan Mrs.V.Pushpa

Standing Counsels For Respondent : Mr.A.Thiagarajan Senior Counsel for Mr.S.Ramesh Kumar 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.883 of 2015 J U D G M E N T (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant/Revenue, calling in question the correctness of the order dated 19.12.2014 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.1565/Mds/2014, relating to the assessment year 2006-07. 2. By order dated 17.11.2015, this Court admitted the aforesaid tax case appeal 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 provision for leave salary is allowable expenditure even though it is not actually paid before the due date of filing the return of income which is against the Section 43B(f)? 2. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in ignoring that the Section 43B(f) was only introduced in the Finance Act, 2001, which came into effect from 01.04.2002?” 3. When the matter was taken up for consideration, the learned Standing Counsels 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 appeal shall not be filed/pursued by the 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.883 of 2015 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 Standing Counsels 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.] 25.08.2022 Internet : Yes gya To 1.The Assistant Commissioner of Income Tax Company Circle-III(1) Chennai 2.The Commissioner of Income Tax (Appeals)-III Chennai 3.The Income Tax Appellate Tribunal 'C' Bench, Chennai R. MAHADEVAN, J. AND 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.883 of 2015 MOHAMMED SHAFFIQ, J. gya Tax Case Appeal No.883 of 2015 25.08.2022

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