M/S.TAMILNADU INDUSTRIAL vs. THE ASSISTANT COMMISSIONER OF

TCA/96/2017HC Madras26 February 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages

AI SummaryWithdrawn

What did the High Court hold?

The High Court decided not to adjudicate the substantial questions of law framed for consideration due to subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020, which provides for the resolution of disputed tax. The learned counsel for the appellant/assessee informed the Court that the assessee had already been issued Form-3 under this Act and sought permission to withdraw the appeal. Consequently, the Tax Case Appeal was dismissed as withdrawn. No costs were awarded. The specific findings of the ITAT on the classification of the loss (capital vs. business) and the reasoning behind it, as well as the ratio decidendi for future cases, were not addressed by the High Court as the appeal was withdrawn.

What were the facts?

The assessee, M/s. Tamil Nadu Industrial Development Corporation Limited, filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT) dated January 5, 2016, pertaining to assessment year 2007-08. The appeal was filed under Section 260A of the Income Tax Act, 1961. The dispute concerned whether a loss arising from the write-off of investments in companies promoted by the assessee constituted a capital loss or a business loss. The High Court was informed that the assessee had been issued Form-3 under the Direct Tax Vivad Se Vishwas Act, 2020, and sought permission to withdraw the appeal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss arising from the write-off of investments made in companies promoted by the assessee would constitute a capital loss and not a business loss, as per the provisions of the Income Tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in not considering that the business of the assessee consisted of promoting companies and that the loss arising from investment in such promoted companies would constitute a business loss and not a capital loss, as per the provisions of the Income Tax Act, 1961? 3. Whether, on the facts and in the circumstances of the case, the Tribunal erred in not following the ratio of the decision of a Co-ordinate Bench in the assessee's own case for earlier years, where realization from investments in promoted companies was held to be business income? Assessee's Contentions: The assessee argued that the loss arising from investments in promoted companies should be treated as a business loss, not a capital loss, as promoting companies was part of its business. The assessee also contended that the Tribunal failed to follow a co-ordinate bench's decision in its own case for earlier years, which held such realizations as business income. Revenue's Contentions: The judgment does not record specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.96 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.02.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI Tax Case Appeal No.96 of 2017 M/s.Tamil Nadu Industrial Development Corporation Limited, 19A, Rukmani Lakshmipathy Road, Egmore, Chennai – 600 008. ... Appellant Vs.

The Assistant Commissioner of Income Tax, Company Circle – III (2), Chennai – 600 034, presently the Income Tax Officer, Non-Corporate Ward – 19(4), Chennai – 600 034. ... Respondent

Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "A" Bench, dated 05.01.2016 passed in I.T.A.No.351/Mds/2012. For Appellant : Mr.R.Venkatanarayanan for M/s.Subbaraya Aiyar For Respondent : Mr.M.Swaminathan, Senior Standing Counsel assisted by Ms.V.Pushpa Page 1/5 http://www.judis.nic.in Tax Case Appeal No.96 of 2017 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 05.01.2016 passed by the Income Tax Appellate Tribunal, Madras "A" Bench, ('the Tribunal' for brevity) in I.T.A.No 351/Mds/2012 for the assessment year 2007-08. 2.The appellant/assessee has raised the following Substantial Questions of Law: “1)Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss arising from write off of the investments made in the companies promoted by the assessee would constitute capital loss and not business loss? 2)Whether on the facts and in the circumstances of the case, the Tribunal erred in not considering that the business of the assessee consisting of promoting companies and loss arising from investment in such promoted companies would constitute business loss and capital loss? Page 2/5 http://www.judis.nic.in Tax Case Appeal No.96 of 2017 3)Whether on the facts and in the circumstances of the case, the Tribunal erred in not following the ratio of the decision of the Co-ordinate Bench in assesse's own case for the earlier years where realisation from investments in promoted companies where it was held to be business income?” 3.We have heard Mr.R.Venkatanarayanan, learned counsel for the appellant/assessee and Mr.M.Swaminathan, learned Senior Standing Counsel for the respondent/Revenue. 4.It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. Page 3/5 http://www.judis.nic.in Tax Case Appeal No.96 of 2017 5.We are informed by the learned counsel for the appellant/ assessee that the assessee had already been issued with Form – 3 on 11.12.2020 and the learned counsel for the appellant seeks permission of this Court to withdraw the appeal. 6.In view of the submission made by the learned counsel for the appellant, the Tax Case Appeal stands dismissed as withdrawn. No costs. [M.D., J.] [T.V.T.S., J.] Index : Yes/No 26.02.2021

Internet : Yes

va To 1) Income Tax Appellate Tribunal, Madras "A" Bench 2)The Assistant Commissioner of Income Tax, Company Circle – III (2), Chennai – 600 034, presently the Income Tax Officer, Non-Corporate Ward – 19(4), Chennai – 600 034. M. DURAISWAMY, J. Page 4/5 http://www.judis.nic.in Tax Case Appeal No.96 of 2017 and T.V. THAMILSELVI, J. va Tax Case Appeal No.96 of 2017

26.02.2021 Page 5/5 http://www.judis.nic.in

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