COMMISSIONER OF INCOME TAX vs. TAMILNADU SMALL INDUSTRIES

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TCA/95/2018HC Madras24 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. Instead, the Court took note of the submission by the Revenue's counsel regarding CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. As the tax effect in the present appeal was stated to be less than this threshold limit, the High Court dismissed the appeal as withdrawn. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The judgment does not contain any finding on the allowability of nomination fees or the applicability of the principle of overriding title.

What were the facts?

The Revenue, Commissioner of Income Tax, Corporate Circle-3, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 09.06.2017 passed by the Income Tax Appellate Tribunal, Madras “C” Bench. The appeal pertained to assessment year 2009-10 and concerned M/s. Tamilnadu Small Industries Corporation Limited. The appeal challenged the Tribunal's decision regarding the allowability of nomination fees paid by the assessee as expenditure. The High Court was informed by the Revenue's counsel about CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue stated that the tax effect in this appeal was below this threshold.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the Tribunal was right and justified in holding that the nomination fees paid by the assessee is allowable expenditure under Section 37(1) of the Income Tax Act, 1961? 2. Whether the Tribunal was right in holding that the principle of overriding title is applicable in the case of the assessee? 3. Is not the finding of the Assessing Officer correct that the payment of nomination fee is only an application of income and hence, not allowable as expenditure under Section 37(1) of the Income Tax Act, 1961? The Revenue argued that the nomination fee payment was an application of income, not an allowable expenditure under Section 37(1). The judgment does not record specific arguments from the assessee regarding these issues, nor does it detail the Tribunal's reasoning on the merits of the substantial questions of law. The Revenue relied on CBDT Circular No. 17/2019.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.95 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.95 of 2018 The Commissioner of Income Tax, Corporate Circle-3, Chennai. ... Appellant Versus M/s.Tamilnadu Small Industries Corporation Limited, Thiru Vi-Ka Industrial Estate, Guindy, Chennai - 600 032. ... Respondent (PAN No.AAACT1239K) Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras “C” Bench, dated 09.06.2017 in I.TA.No.334/Mds/2017. For Appellant : M/s.M.Swaminathan &

V. Pushpa Standing Counsel For Respondent : Mr.S.Ramesh Kumar Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.95 of 2018 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, challenging the order dated 09.06.2017 passed by the Income Tax Appellate Tribunal, 'C' Bench Chennai in I.T.A.No.334/Mds/2017, relating to the assessment year 2009-10, by raising the following substantial questions of law:- "(i) Whether the Tribunal was right and justified in holding that the nomination fees paid by the assessee is allowable expenditure under Section 37 (1)? (ii) Whether the Tribunal was right in holding that the principle of overriding title is applicable in the case of the assessee? (iii) Is not the finding of the Assessing Officer correct that the payment of nomination fee is only an application of income and hence, not allowable as expenditure under Section 37(1) of the Income Tax Act? " 2. When the matter was taken up for consideration, the learned counsel 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 Department before Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.95 of 2018 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. 3. In the light of the aforesaid submissions made by the learned counsel 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.) 24.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.95 of 2018 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal Madras 'C' Bench, Chennai. 2. The Commissioner of Income Tax, (Appeals) - 13, 121, Mahatma Gandhi Road, Nungambakkam, Chennai. 3. The Assistant Commissioner of Income Tax, Corporate Circle-3(1), Chennai. T.C.A.No.95 of 2018 24.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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