THE COMMISSIONER OF INCOME TAX vs. M/S.SHRIRAM CAPITAL TRUST

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TCA/992/2015HC Madras22 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted the submission by the Revenue's Senior Standing Counsel regarding the low tax effect as per CBDT's Circular No. 9 of 2024. Based on this submission, the Court decided to dispose of the appeal. The substantial questions of law were kept open for adjudication at a later appropriate stage. The appeal was dismissed for low tax effect, with no order as to costs. The specific findings on the merits of the three substantial questions of law were not adjudicated by the High Court.

What were the facts?

The Revenue has filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order of the Income Tax Appellate Tribunal, Chennai. The appeal pertains to Assessment Year 2001-02 and concerns the deletion of minimum guarantee charges amounting to Rs. 3,24,72,982/- and interest income of Rs. 16,42,282/-. The assessee is M/s. Shriram Capital Trust Pvt. Ltd. The High Court was informed by the Revenue's counsel that the tax effect in this case is below the monetary limit prescribed by CBDT's Circular No. 9 of 2024. Consequently, the Revenue requested the appeal to be disposed of without adjudicating the substantial questions of law.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in upholding the CIT(A)'s deletion of minimum guarantee charges of Rs. 3,24,72,982/-, particularly when the assessee followed the project completion method of accounting, allowing expenditure only in the year income is offered? (Section 145 of the Income Tax Act, 1961) 2. Whether the Tribunal was correct in upholding the CIT(A)'s deletion of interest income of Rs. 16,42,282/- received from Shree Housing Pvt. Ltd. by treating it as business income? (Section 28 of the Income Tax Act, 1961) 3. Whether the Tribunal was correct in holding that surplus funds deposited and interest earned on advances should be assessed as business income and not as income from other sources? (Section 56 of the Income Tax Act, 1961) Assessee's Contentions: Not recorded. Revenue's Contentions: The Revenue argued that the Tribunal erred in deleting the minimum guarantee charges, interest income, and in classifying the surplus funds' interest as business income, especially considering the assessee's accounting method. The Revenue also submitted that the tax effect is below the prescribed monetary limit.

Which sections of the Income-tax Act were involved?

Section 260A,Section 145,Section 28,Section 56

AI-generated summary — verify with the full judgment below

T.C.A.No.992 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.10.2024 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.992 of 2015 The Commissioner of Income Tax, Chennai. ... Appellant -Vs- M/s.Shriram Capital Trust Pvt. Ltd., No.4, Mookambiga Complex, Lady Desika Charry Road, Mylapore, Chennai - 600 004. ... Respondent PRAYER : Tax Case Appeal filed under Section 260 A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 23.06.2011 in I.T.A.No.208/Mds/2011 for the assessment year 2001-02. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel For Respondent : Mr.R.Sivaraman 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.992 of 2015 J U D G M E N T (Judgment of the Court was delivered by R.SURESH KUMAR, J.) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, Chennai by raising the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case the Tribunal was right in upholding the order of CIT(A) who had deleted the minimum guarantee charges amounting to Rs.3,24,72,982/- especially when the asseessee is following project completion method of accounting wherein the expenditure relating to the project is to be allowed only in the year in which the income is offered? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in upholding the order of CIT(A) who deleted the interest amount of Rs.16,42,282/- received from Shree Housing Pvt. Ltd. by treating the same as business income? 3. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the surplus funds deposited and the interest earned on the advances was to be assessed as business income only and not to be treated as income from other sources? 2. It is brought to our notice by the learned Senior Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit imposed and therefore, the appeal can be disposed of, keeping the 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.992 of 2015 substantial questions of law raised in this appeal open for adjudication at a later point of time. 3. Recording the aforesaid submission made by the learned Senior Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication at appropriate stage. However, there shall be no order as to costs. (R.S.K., J.) (C.S.N., J.) 22.10.2024 NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji To Income Tax Appellate Tribunal 'B' Bench, Chennai. 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.992 of 2015 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.992 of 2015 22.10.2024 4/4 https://www.mhc.tn.gov.in/judis

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