COMMISSIONER OF INCOME TAX, vs. M/S KALLAKURICHI CO-OPERATIVE

T.C.A.Nos.934 & 936 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.Nos.934 & 936 of 2019 and C.M.P.No.24822 of 2019 Commissioner of Income Tax, D.P.Thottam, Muthialpet, Puducherry 605 003. ... Appellant in both the appeals Vs M/s.Kallakurichi Co-operative Sugar Mills Ltd., Unit II, Kachirapalayam, Kallakurichi 606 207. PAN: AAA AK 0655 Q ...Respondent in both the appeals COMMON PRAYER: Tax Case Appeals filed under Section 260A of Income Tax Act, 1961 against the order dated 07.01.2014 in ITA Nos.1952 & 1954/Mds/2013 on the file of the Income Tax Appellate Tribunal Chennai 'D' Bench for the assessment years 2005-06 & 2009- 10. For Appellant : Mr.J.Narayanasamy

For Respondent : Mr.A.S.Sriram 1/6 http://www.judis.nic.in T.C.A.Nos.934 & 936 of 2019 C O M M O N J U D G M E N T (Order of the Court was delivered by N.KIRUBAKARAN, J)

The assessee is a co-operative sugar mill. During the assessment year, the assessee has made a provision for some of the interest on loans payable to the Government of Tamil Nadu. The Assessing officer rejected the claim of Interest paid under Section 43B of the Income Tax Act on the pretext that the loans were obtained from the National Co-operative Development Corporation (NCDC) by co- operative sugar mills. 2.On appeal, the CIT (Appeals) has observed that the assessee is a Government controlled society and the Government of Tamil Nadu approached NCDC for sanction of loan, assistance to be utilized as working capital by 16 co-operative sugar mills under certain terms and conditions. All the evidences prove that the loans are granted by the Government. The nature of the loans and interest payable are to the Government only. With the above observation and by following the decision of the ITAT in assessee's own case in I.T.A.No.1079/Mds/2012 2/6 http://www.judis.nic.in T.C.A.Nos.934 & 936 of 2019 for the assessment year 2006-07 vide order dated 14.12.2012, the CIT (Appeals) deleted the disallowance made by the assessing officer. 3.Aggrieved against the CIT(A) order, the Revenue filed appeals before the Income Tax Appellate Tribunal. The appellate tribunal following its own decision in the assessee's case for the earlier assessment year, dismissed the appeals filed by the department. Aggrieved by 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 Tribunal was right in allowing non-payment of interest u/s.43B to National Co-operative Development Corporation which is a public financial institution? (ii)Whether on the facts and in the circumstances of the case, the Tribunal was right in allowing deduction u/s.80P when the assessee gross total income after set off carry forward loss in Nil? 3/6 http://www.judis.nic.in T.C.A.Nos.934 & 936 of 2019 (iii)Whether the finding of the Tribunal is proper especially when the method of accounting followed by the assessee is mercantile and interest payment is to be allowed u/s.43 B?"

5.Mr.J.Narayanasamy, 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 4/6 http://www.judis.nic.in T.C.A.Nos.934 & 936 of 2019 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" 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 laws framed are left open. In the event the tax effect is above the limit fixed in the said 5/6 http://www.judis.nic.in T.C.A.Nos.934 & 936 of 2019 N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay 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.) 22.11.2019 ay To Commissioner of Income Tax, D.P.Thottam, Muthialpet, Puducherry 605 003.

T.C.A.Nos.934 & 936 of 2019 and C.M.P.No.24822 of 2019 6/6 http://www.judis.nic.in