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

TCA/97/2017HC Madras30 March 2021Bench: Hon`ble Mr Justice M.DURAISWAMY6 pages

AI SummaryWithdrawn

What did the High Court hold?

The High Court decided not to adjudicate the substantial questions of law due to the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had informed the court that they had filed the requisite forms under this Act. Therefore, the Court found no useful purpose in keeping the appeal pending. The Tax Case Appeal was disposed of on the ground that the assessee had availed the benefit under the Vivad Se Vishwas Act. The Court granted liberty to the assessee to restore the appeal in the event the decision to be passed by the Department under the Act was not in their favour. The substantial questions of law were left open. The operative direction was to dispose of the appeal with the aforementioned liberty, leaving the questions of law undecided.

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 the order of the Income Tax Appellate Tribunal, Madras “A” Bench, dated 05.01.2016. The appeal pertained to Assessment Year 2008-09. The dispute revolved around whether the loss arising from the write-off of investments made in companies promoted by the assessee constituted capital loss or business loss. The High Court noted that the Direct Tax Vivad Se Vishwas Act, 2020, had been enacted. The assessee informed the court that they had filed the requisite forms under this Act. Consequently, the High Court decided not to adjudicate the substantial questions of law.

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 capital loss and not business loss? (Question of law) 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 business loss and not capital loss? (Question of mixed law and fact) 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? (Question of law) Assessee's Contentions: The assessee argued that the loss arising from investments in promoted companies should be treated as business loss, not capital loss, as promoting companies was part of their business. They also contended that the Tribunal failed to follow its own earlier decisions for prior years where such realizations were treated as business income. Revenue's Contentions: The judgment does not record any 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.97 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.03.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI Tax Case Appeal No.97 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 Tax Case 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.610/Mds/2012. For Appellant : Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar

For Respondent : Mrs.V.Pushpa

Standing Counsel Page 1/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.97 of 2017

J U D G M E N T (Delivered by M. DURAISWAMY, J) The 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, Chennai ('the Tribunal' for brevity) in I.T.A.No.610/Mds/2012 for the Assessment Year 2008-09. The appellant/assessee has raised the following Substantial Questions of Law in the above appeal : "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? 3.Whether on the facts and in the circumstances of the case Page 2/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.97 of 2017 the Tribunal erred in not following the ratio of the decision of the co-ordinate Bench in assessee's own case for the earlier years where realisation from investments in promoted companies where it was held to be business income?” 2. We have heard Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar, learned counsel for the appellant/ assessee and Mrs.V.Pushpa, learned Standing Counsel for the respondent/Revenue. 3. 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. 4. We are informed by the learned counsel for the appellant/assessee that the assessee has already filed the requisite Forms 1 & 2 on 19.11.2020 under Section 4 of the Act. Page 3/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.97 of 2017 5. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed the requisite Forms 1 & 2 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. 6. With this observation, the Tax Case Appeal stands disposed of with Page 4/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.97 of 2017 the aforementioned liberty and consequently, the Substantial Questions of Law are left open. No costs. [M.D., J.] [T.V.T.S., J.] 30.03.2021

Index : Yes/No Internet : Yes mkn To 1.The 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. Page 5/6 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.97 of 2017 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. mkn Tax Case Appeal No.97 of 2017

30.03.2021 Page 6/6 https://www.mhc.tn.gov.in/judis/

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