COMMISSIONER vs. M/S LAXMI

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TCA/884/2017HC Madras28 July 2020Bench: HON'BLE DR.JUSTICE VINEET KOTHARI4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court of Judicature at Madras dismissed the appeal filed by the Revenue. The dismissal was based on an instruction issued by the Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019 dated August 8, 2019. This circular stipulates that appeals shall not be filed or 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). In the present case, the tax effect was stated to be less than this monetary limit. Therefore, the Revenue's appeal was dismissed as withdrawn. The substantial question of law was kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Corporate Circle 1, Madurai, filed a Tax Case Appeal under Section 260-A of the Income Tax Act, 1961, against an order dated May 31, 2017, passed by the Income Tax Appellate Tribunal (ITAT), Madras ‘C’ Bench. The appeal pertains to Assessment Year 2010-2011 and concerns the Assessee, M/s. Laxmi Selvaraj Tex Private Limited. The core of the dispute revolves around the Assessee's eligibility to carry forward business losses to subsequent assessment years, specifically when the return of income for the relevant year was not filed within the time stipulated under Section 139(1). The appeal was heard by the High Court of Judicature at Madras.

What were the issues?

1. Whether the Income Tax Appellate Tribunal was correct in holding that the Assessee is entitled to carry forward business losses to subsequent assessment years when the Assessee had not filed its Return of Income for the relevant Assessment Year within the time allowed under Section 139(1)? Assessee's Contentions: The judgment does not record any specific contentions made by the Assessee. The appeal was dismissed based on a CBDT Circular. Revenue's Contentions: The Revenue contended that the ITAT erred in allowing the carry forward of business losses when the return of income was filed beyond the due date prescribed under Section 139(1). The Revenue relied on the provisions of Section 139(1) of the Income Tax Act, 1961, which mandates timely filing of returns for certain benefits, including carry forward of losses.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Madras ‘C’ Bench dated 31.5.2017 in in I.T.A.No.2271/Mds/2015.

Order dt 28.7.2020 in TCA 884 of 2017 CIT v . Laxmi Selvaraj Tex Pvt. Ltd. IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.7.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.884 of 2017 Commissioner of Income Tax, Corporate Circle 1, Madurai. Appellant vs M/s.Laxmi Selvaraj Tex Private Limited, No.9/7B, Dindigul Road, Vilangudi, Madurai 625 018. PAN: AABCL 5470 H 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 ‘C’ Bench dated 31.5.2017 in in I.T.A.No.2271/Mds/2015. For Appellant : Mr.M.Swaminathan, Senior Standing Counsel ORDER (Made by Dr.Vineet Kothari,J) The Court was held by Video Conference, as per the Resolution of the Full Court dated 3 July 2020, by Judges at their respective residences and the counsel, staff of the Court appearing from their respective residences. http://www.judis.nic.in Order dt 28.7.2020 in TCA 884 of 2017 CIT v . Laxmi Selvaraj Tex Pvt. Ltd. 2. This Tax Case has been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, ‘C’ Bench dated 31.5.2017 in in I.T.A.No.2271/Mds/2015, for the Assessment Year 2010-2011, by raising the following substantial question of law: "(i) Whether the Income Tax Appellate Tribunal is right in holding that the Assessee is entitled to carry forward the business losses to the subsequent Assessment Year when the Assessee has not filed his Return of income for the relevant Assessment Year within the time allowed under Section 139(1)?" 3. When the matter is taken up for hearing, learned Senior Standing Counsel brought to our notice the instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, 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). 4. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeal filed by the Revenue is dismissed, as withdrawn, keeping open the substantial question of http://www.judis.nic.in Order dt 28.7.2020 in TCA 884 of 2017 CIT v . Laxmi Selvaraj Tex Pvt. Ltd. law for determination in appropriate cases. Copy of this order may be sent to the Respondent/Assessee. No costs. (V.K.J.) (K.R.,J.) 28.7.2020 ssk. Index:Yes/No Internet:Yes/No http://www.judis.nic.in Order dt 28.7.2020 in TCA 884 of 2017 CIT v . Laxmi Selvaraj Tex Pvt. Ltd. Dr.VINEET KOTHARI, J. and KRISHNAN RAMASAMY, J. ssk. T.C.A.No.884 of 2017 28.7.2020 http://www.judis.nic.in

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