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The High Court, in light of the submission made by the learned counsel for the appellant/Revenue regarding CBDT Circular No. 17/2019, which sets a monetary limit of Rs. 1,00,00,000/- for pursuing appeals before the High Court, observed that the tax effect in the present appeal was less than this threshold. Consequently, the Court dismissed the appeal as withdrawn. The substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The judgment does not provide a finding on the merits of the substantial questions of law raised by the Revenue, nor does it detail the reasoning of the ITAT or the ratio decidendi for the original dispute.
The High Court held that the substantial questions of law raised in the appeals had already been decided in favour of the assessee by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax and another (2021 SCC Online SC 159). The Supreme Court had held that amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers for the resale/use of computer software through EULAs/distribution agreements do not constitute royalty for the use of copyright in the computer software. Consequently, such payments do not give rise to any income taxable in India, and persons referred to in Section 195 of the Income Tax Act were not liable to deduct TDS. The High Court followed this decision and answered the substantial questions of law against the Revenue. The appeals were dismissed.
The High Court held that substantial questions of law Nos. 2 to 4 were covered against the Revenue by this Court's decision in the assessee's own case for assessment year 2007-2008 (T.C.A. No. 299 of 2014 dated 31.03.2021). This earlier decision, in turn, relied on a Division Bench judgment in CIT vs. Fluidtherm Technology (P) Ltd. ([2015] 57 taxmann.com 87 (Madras)). Regarding the agency commission paid to a non-resident, the Court held that it was a commission simpliciter for procuring orders and not 'fees for technical services' as defined under Section 9(1)(vii). The amended explanation to Section 9(2) was held to be applicable only if the payment fell under Section 9(1)(v), (vi), or (vii), which was not the case here. Concerning the deduction under Section 80IA, the Court, following the decision in CIT vs. Fluidtherm Technology (P) Ltd., held that losses already absorbed against profits of earlier years cannot be notionally brought forward and set off against the profits of the eligible business, as Section 80IA(5) does not mandate such a procedure. Therefore, all substantial questions of law were answered against the Revenue and in favour of the assessee.
The High Court did not decide the substantial questions of law on merits. The learned counsel for the appellant/assessee filed a memo stating that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, and paid a portion of the tax, rendering nothing further for adjudication. Consequently, the assessee sought permission to withdraw the appeal. The High Court, in view of the submissions, dismissed the tax appeal as withdrawn. No costs were awarded. The operative direction was to dismiss the appeal as withdrawn.
The High Court noted that both the learned counsel for the appellant (Revenue) and the respondent (Assessee) jointly submitted that the substantial questions of law raised in these appeals had already been decided in favour of the assessee by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax and another. This decision was also followed by a coordinate bench of the High Court in T.C.A. No. 150 of 2015. Furthermore, the learned counsel for the Revenue submitted that the tax effect in these appeals was less than the threshold limit stipulated in CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. In light of these submissions, the High Court dismissed the appeals as withdrawn, stating that the tax effect was below the monetary limit. No costs were awarded, and connected miscellaneous petitions were closed. The Tribunal's decision in favour of the assessee on the royalty issue was implicitly upheld by the Revenue's decision to withdraw the appeals based on the Supreme Court's ruling and the tax effect threshold.
The High Court noted that during the pendency of the Tax Case Appeal, the assessee had filed the requisite Forms 1 and 2 under Section 4 of the Direct Tax Vivad Se Vishwas Act, 2020. These forms were accepted, and Form 3 was issued to the assessee on 08.04.2021 by the Income Tax Department. The Revenue's counsel fairly conceded this development. In light of the assessee having availed the benefit conferred under the beneficial legislation enacted for the resolution of disputed tax matters, the Court found it unnecessary to decide the substantial questions of law raised in the appeal. The appeal was disposed of, directing the department to process the application in accordance with the Vivad Se Vishwas Act and communicate the decision to the assessee at the earliest. No costs were awarded. The specific findings on the interpretation of Section 32(1)(iia) were not rendered due to the settlement under the Vivad Se Vishwas Act.
The High Court dismissed the appeals as withdrawn. The Court noted the submission made by the learned counsel for the appellant (Revenue) regarding Circular No. 17/2019 dated 08.08.2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court in cases where the tax effect does not exceed Rs. 1,00,00,000/-. It was submitted that the tax effect in these appeals was less than the threshold limit. Consequently, the appeals were dismissed as withdrawn, with the substantial question of law being kept open for determination in appropriate cases. No costs were awarded. The connected miscellaneous petition was also closed.
The High Court noted that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation for the resolution of disputed tax matters. The declarations submitted by the assessee under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the High Court deemed it unnecessary to decide the substantial questions of law that had arisen in the tax case appeals. The appeal was disposed of by recording the submissions of both parties. The department was directed to process the application under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded.
The High Court did not decide the substantial questions of law on merits. The learned counsel for the appellant/Revenue brought to the court's notice Circular No. 17/2019 dated August 8, 2019, issued by the Central Board of Direct Taxes (CBDT). This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). The Revenue submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.
The High Court did not decide the substantial questions of law on merits. The Revenue's counsel brought to the court's notice CBDT Circular No. 17/2019 dated 08.08.2019, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The counsel submitted that the tax effect in these appeals was less than this threshold limit. Consequently, the court dismissed the present appeals as withdrawn, stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded, and the connected miscellaneous petitions were closed.
The High Court did not decide the substantial questions of law on merits. The learned counsel for the Revenue brought to the court's notice CBDT Circular No. 17/2019 dated 08.08.2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. It was submitted that the tax effect in these appeals was less than this threshold limit. Consequently, the High Court, in light of this submission and the circular, dismissed the present appeals as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded, and connected miscellaneous petitions were closed.
The High Court dismissed the Tax Case Appeal as having become infructuous. The Court recorded the submission of the appellant/assessee that the relief sought in the appeal had become infructuous because the impugned order no longer survived for consideration in view of subsequent judgments. Specifically, the assessee's counsel referred to the High Court's judgment in CIT v. Sree Ayyanar Spinning and Weaving Mills Ltd. reported in (2008) 296 ITR 53 (Madras) and the Supreme Court's judgment in the assessee's own case reported in (2008) 301 ITR 434 (SC). The assessee had also filed a memo detailing the procedural history, including the ITAT's recall of its original order, the Revenue's appeal against the recall, the High Court's initial decision, the Supreme Court's intervention upholding the recall, and the subsequent dismissal of the Revenue's appeal by the High Court. Based on these submissions and the memo, the Court concluded that the impugned order no longer survived due to the finality of the Miscellaneous Proceedings before the ITAT, which had recalled the impugned order for fresh adjudication. Therefore, the appeal was dismissed as infructuous, with no costs.
The High Court noted that during the pendency of the appeals, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the requisite forms, which were accepted, and Form 3 was issued by the Income Tax Department. The Revenue conceded this development. Consequently, the High Court held that it was unnecessary to decide the substantial questions of law that had arisen in the appeals. The appeals were disposed of based on the submissions made by both sides, with a direction to the department to process the applications under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded.
The High Court of Judicature at Madras, in light of the submission made by the learned counsel for the appellant/Revenue regarding CBDT Circular No.17/2019, dismissed the appeal. The circular mandates that appeals shall not be filed or pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this stipulated threshold limit. Consequently, the appeal was dismissed as withdrawn. The substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.
The High Court dismissed the appeals as withdrawn. The Revenue's counsel brought to the court's notice Circular No. 17/2019 dated 08.08.2019 issued by the CBDT, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. It was submitted that the tax effect in these appeals was below this threshold and there was no audit objection. Consequently, the appeals were dismissed as withdrawn, with the substantial questions of law left open for determination in appropriate cases. No costs were awarded. The operative direction was to dismiss the appeals as withdrawn.
The High Court dismissed the appeal as withdrawn. The Revenue's counsel brought to the court's notice Circular No. 17/2019 dated 08.08.2019 issued by the CBDT, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The counsel submitted that the tax effect in this particular appeal was less than the stipulated threshold limit. Consequently, the Court, in light of this submission and the circular, dismissed the appeal as withdrawn. The substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The specific findings of the ITAT on the five questions of law were not adjudicated upon by the High Court.
The High Court did not decide the substantial questions of law on merits. Instead, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs.1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this threshold limit. In light of this submission, the High Court dismissed the appeal as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded. Therefore, there is no finding on the merits of the additions or deletions made by the Tribunal.
The High Court dismissed the appeal filed by the Revenue. The dismissal was based on a Circular No. 17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes (CBDT). This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). The learned counsel for the Revenue brought to the court's notice that the tax effect in the present appeal was less than this threshold limit. Consequently, the appeal was dismissed as withdrawn. The court explicitly stated that the substantial question of law remains open for determination in an appropriate case. No costs were awarded.
The High Court noted that during the pendency of the appeal, the assessee had filed Forms 1 and 2 under Section 4 of the Direct Tax Vivad Se Vishwas Act, 2020. These forms were accepted by the Income Tax Department, and Form 3 was issued to the assessee on 27.01.2021. The learned counsel for the assessee filed a memo to this effect, which was fairly conceded by the learned senior standing counsel for the Revenue. In light of these developments, the High Court found it unnecessary to decide the substantial questions of law raised in the appeal. The appeal was disposed of, directing the department to process the application under the Vivad Se Vishwas Act in accordance with the provisions of the Act and communicate the decision to the assessee at the earliest. No costs were awarded. The specific findings on the substantial questions of law were not made.
The High Court noted the submission by the Revenue regarding CBDT Circular No.17/2019, which sets a monetary limit of Rs.1,00,00,000/- for filing or pursuing appeals before the High Court. The Revenue stated that the tax effect in the present appeals was less than this stipulated threshold. Consequently, the High Court dismissed the appeals as withdrawn, in light of the Revenue's submission about the tax effect being below the monetary limit. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were imposed. The connected miscellaneous petition was also closed.
The High Court, in its judgment dated December 10, 2021, decided all three substantial questions of law in favour of the assessee and against the Revenue. For the first question, the Court noted that a Co-ordinate Bench had previously decided an identical question in favour of the assessee in TCA No. 11 of 2017. In that prior decision, the Court held that the expenditure, even if not qualifying under Section 35, was revenue expenditure allowable under Section 37 of the Act, as it was incurred in the ordinary course of business and was not of a capital nature. Regarding the second question, the Court acknowledged the Revenue's submission that this issue was covered against the Revenue by the Court's decision in Marg Ltd. v Commissioner of Income Tax. This precedent established that disallowance under Section 14A read with Rule 8D cannot exceed the exempt income earned, and the AO cannot resort to Rule 8D computation without recording satisfaction and providing reasons. For the third question, the Court noted that a Division Bench had decided this issue in favour of the assessee in CIT vs Computer Age Management Services (P.) Ltd., allowing depreciation at 60% on software. Consequently, all substantial questions of law were answered in favour of the assessee, and the Revenue's appeal was dismissed.
The High Court, upon considering the submissions made by the learned counsel for the appellant/Revenue, noted the CBDT Circular No. 17/2019. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The judgment did not decide the substantial questions of law on merits.
The High Court dismissed the appeals as withdrawn. The Court noted the submission by the Revenue regarding CBDT Circular No. 17/2019, which sets a monetary limit of Rs. 1,00,00,000/- for filing or pursuing appeals before the High Court. The Revenue stated that the tax effect in the present appeals was below this threshold. Consequently, the appeals were dismissed as withdrawn, with the substantial questions of law left open for determination in appropriate cases. No costs were imposed, and the connected miscellaneous petition was closed. The judgment does not provide findings on the merits of the substantial questions of law raised.
The High Court noted the submission by the learned counsel for the appellant/Revenue regarding CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue further submitted that the tax effect in the present appeal was less than this threshold limit. In light of this submission, the High Court dismissed the present appeal as withdrawn, stating that the substantial question of law is kept open for determination in an appropriate case. No costs were awarded. The specific findings of the ITAT on the penalty deletion were not adjudicated upon by the High Court due to the dismissal as withdrawn.
The High Court did not decide the substantial questions of law on merits. Instead, the Court took note of the submission by the Revenue's counsel regarding CBDT Circular No.17/2019. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs.1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this stipulated threshold limit. Consequently, the High Court dismissed the appeal as withdrawn, while explicitly stating that the substantial questions of law remain open for determination in an appropriate case. No costs were awarded.
The High Court noted that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation for resolving disputed tax matters. The assessee's declarations under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court found it unnecessary to decide the substantial questions of law raised in the tax case appeal. The appeal was disposed of based on the submissions made by both parties, with a direction to the department to process the application under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded. The specific findings on the disallowance under Section 40(a)(ia) and the assessment of sundry creditors were not adjudicated upon.
The High Court noted that the assessee had availed the benefit conferred under the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation enacted for the resolution of disputed tax matters. The declarations submitted by the assessee under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court deemed it unnecessary to decide the substantial questions of law raised in the Tax Case Appeal. The appeal was disposed of based on the submissions made by both parties, with a direction to the department to process the application under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded.
The High Court held that the substantial question of law is answered in favour of the assessee. Following its own decision in S.P. Spinning Mills (P) Ltd. v. Assistant Commissioner of Income Tax (2021) 433 ITR 61 (Mad), the Court reiterated that the sale of Carbon Emission Reduction (CER) or Carbon Credits is to be considered a capital receipt and not liable to tax. The Court referenced earlier Supreme Court decisions in Commissioner of Income Tax v. Maheshwari Devi Jute Mills Ltd. [(1965) 57 ITR 36 (SC)] and M/s. Empire Jute Co. Ltd. v. Commissioner of Income Tax [(1980) 4 SCC 25] concerning the distinction between capital and revenue receipts. The Court found that the ITAT had failed to properly consider the assessee's contention that the receipt was capital in nature. It noted that if the receipt is capital, it goes out of the purview of gross total income, making any claim for deduction under Section 80IA irrelevant. The introduction of Section 115BBG from April 1, 2018, was also noted as a point of confusion prior to its enactment. The appeal was dismissed, with the substantial question of law answered against the Revenue.
The High Court disposed of the appeals in a specific manner for each issue. For Issue A (Reinsurance Premium), the matters were remanded back to the Tribunal for a decision, taking into account directions previously given by the High Court in a related matter concerning Cholamandalam General Insurance Company Ltd. This implies the Tribunal needs to re-examine aspects like disallowance under Section 40(a)(i), partial rejection of appeals by the CIT(A), and the justification for restricting claims. For Issue B (Section 14A), the question of law was decided against the assessee, following the Delhi High Court's decision in Principal Commissioner of Income Tax Vs. Oriental Insurance Company Ltd., which held that Section 14A is excluded in computing the income of an insurance company due to the non-obstante clause in Section 44. For Issue C (Profit on Sale of Investment), the matter was remitted back to the Tribunal to re-examine in light of the Madras High Court's decision in Commissioner of Income Tax Vs. United India Insurance Co. For Issue D (Section 10(23G)), the question of law was decided against the assessee, as the appellant stated it was not pressed. The operative directions were to remand for Issues A and C, and decide against the assessee for Issues B and D.
The High Court noted that the assessee had availed the benefits conferred under the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation for resolving disputed tax matters. The assessee's declarations under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court found it unnecessary to decide the substantial questions of law that had arisen in the Tax Case Appeal. The appeal was disposed of based on the submissions made by both the assessee and the Revenue, recording that the assessee had successfully resolved the dispute through the Vivad Se Vishwas scheme. The Court directed the department to process the application under the Act at the earliest and communicate the decision to the assessee. No costs were awarded, and the connected miscellaneous petitions were closed.
The High Court dismissed the appeals as withdrawn. The dismissal was based on the submission by the Revenue's counsel regarding CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue stated that the tax effect in these appeals was less than the prescribed threshold limit. Consequently, the appeals were dismissed as withdrawn, with the court explicitly stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were imposed, and connected miscellaneous petitions were closed.
The High Court noted that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation for the resolution of disputed tax matters. The declarations submitted by the assessee under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of these developments, the Court deemed it unnecessary to decide the substantial questions of law that arose in the Tax Case Appeal. The appeal was disposed of based on the submissions made by both parties. The Court directed the department to process the application in accordance with the Act and communicate the decision to the assessee at the earliest. No costs were awarded. The specific findings on the original issues raised by the assessee before the Tribunal were not adjudicated upon by the High Court.
The High Court noted that the assessee had availed the benefit conferred under the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation enacted for the resolution of disputed tax matters. The declarations submitted by the assessee under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court found it unnecessary to decide the substantial questions of law that had arisen in the tax case appeals. The appeals were disposed of by recording the submissions of both sides. The department was directed to process the applications under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded. The specific findings on the substantial questions of law were not rendered due to the settlement under the Vivad Se Vishwas Act.
The High Court noted that during the pendency of the appeals, the assessee had successfully availed the benefits of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the requisite forms (Forms 1 and 2), which were accepted by the Income Tax Department, and Form 3 was issued to the assessee. The Revenue's counsel fairly conceded this development. In light of the assessee having resolved the disputed tax under the beneficial legislation, the High Court deemed it unnecessary to decide the substantial questions of law that had arisen in these appeals. The appeals were disposed of based on the submissions made by both sides, with a direction to the department to process the applications at the earliest in accordance with the Act and communicate the decision to the assessee. No costs were awarded.
The High Court noted that during the pendency of the appeals, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the necessary declarations (Forms 1 and 2 under Section 4(1)), which were accepted by the Income Tax Department, and Form 3 was issued on 02.11.2020. The Revenue fairly conceded this development. In view of the assessee having opted for and received the benefits under the Vivad Se Vishwas Act, the Court found it unnecessary to decide the substantial questions of law raised in the appeals. The appeals were disposed of based on the submissions made by both sides, with a direction to the department to process the applications under the Act at the earliest and communicate the decision to the assessee. No costs were awarded.
The High Court did not adjudicate on the merits of the substantial questions of law. The learned counsel for the assessee informed the court that the assessee had opted for the Direct Tax Vivad Se Vishwas Act, 2020, and requested that the appeals be dismissed as withdrawn to enable them to pursue the matter before the concerned authority. Memos dated 10.11.2021 were filed to this effect. The court noted that this submission was not seriously disputed by the revenue. Consequently, the court was of the opinion that nothing survived for adjudication. The appeals were disposed of, recording the submissions made, with a direction to the authority concerned to process the applications under the Vivad Se Vishwas Act in accordance with the Act and communicate the decision to the assessee at the earliest. No costs were awarded. The connected miscellaneous petitions were also closed.
The High Court noted that the assessee had availed the benefit conferred under the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation for the resolution of disputed tax matters. The assessee's declarations under this Act were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court deemed it unnecessary to decide the substantial questions of law that had arisen in the Tax Case Appeal. The appeal was disposed of based on the submissions made by both the assessee and the Revenue, with a direction to the department to process the application under the Vivad Se Vishwas Act in accordance with its provisions and communicate the decision to the assessee at the earliest. No costs were awarded. The operative direction was to process the Vivad Se Vishwas application.
The High Court noted that during the pendency of the Tax Case Appeal, the assessee had successfully availed the benefits of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the necessary forms, which were accepted by the Income Tax Department, and Form 3 was issued. Both the assessee and the Revenue conceded this development. Consequently, the Court found it unnecessary to decide the substantial questions of law that had arisen in the appeal. The appeal was disposed of based on the submissions made by both parties, recording that the assessee had already obtained relief under the beneficial legislation. The department was directed to process the application under the Act at the earliest and communicate the decision to the assessee.
The High Court noted that the assessee had availed the benefits conferred under the Direct Tax Vivad Se Vishwas Act, 2020, a beneficial legislation enacted for the resolution of disputed tax matters. The declarations submitted by the assessee were accepted, and Form 3 was issued by the Income Tax Department. In light of this development, the Court found it unnecessary to decide the substantial questions of law that arose in the tax case appeal. The appeal was disposed of, directing the department to process the application in accordance with the Act and communicate the decision to the assessee at the earliest. No costs were awarded.
The High Court noted that during the pendency of the appeal, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the requisite Forms 1 and 2, which were accepted, and Form 3 was issued by the Income Tax Department on 21.04.2021. The learned standing counsel for the Revenue conceded to this development. In light of the assessee having opted for and received acceptance under the Vivad Se Vishwas Act, the High Court deemed it unnecessary to decide the substantial questions of law that arose in the tax case appeal. The appeal was disposed of recording the submissions, with a direction to the department to process the application under the Act and communicate the decision to the assessee. No costs were awarded. The specific findings on the substantial questions of law were not rendered.
The High Court noted that during the pendency of the appeal, the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed the requisite forms, which were accepted by the Income Tax Department, and Form 5 was issued. The learned standing counsel for the revenue fairly conceded to this development. In light of this, the High Court found it unnecessary to decide the substantial questions of law raised in the appeal. The appeal was disposed of based on the submissions made by both sides, recording that the assessee had successfully utilized the beneficial legislation for dispute resolution. The department was directed to process the application under the Vivad Se Vishwas Act at the earliest and communicate the decision to the assessee. No costs were awarded.
The High Court, in view of the submission made by the learned counsel for the appellant and recording the memo filed by the appellant, dismissed the appeal as withdrawn. The Court noted that the appellant had opted for the 'Vivad Se Vishwas' Scheme and Act, 2020, and had settled all tax dues, leading to the preference to withdraw the appeal. Consequently, no costs were imposed, and the connected miscellaneous petition was closed. The judgment does not record any decision on the merits of the original appeal or any specific issue that was decided by the ITAT.
The High Court held that the substantial questions of law involved in these appeals were no longer res integra. For questions 1 and 2, the Court noted that the Supreme Court, in CIT vs. HCL Technologies Ltd. (2018) 404 ITR 719, had decided the issue in favour of the assessee. For question 3, this Court had previously decided in favour of the assessee in T.C.A.No.733/2013 (CIT vs. M/s. United India Insurance Co. Ltd.). For question 4, this Court had ruled in favour of the assessee in CIT vs. TAC Investments Finance (Madras) Ltd. (2016) 74 Taxmann.Com 38. For question 5, the Court referred to the decision of this Court in CIT vs. M/s. Yokogowa (2017) 77 Taxmann.Com 41 (SC) which was in favour of the assessee. Consequently, as all substantial questions of law had been authoritatively decided in favour of the assessee by the Supreme Court and this Court, the Tax Case Appeals were liable to be dismissed on the same lines.
The High Court noted that the appeals before it arose from orders passed in Miscellaneous Petitions filed by the Revenue. The core issue was the applicability of Section 115JB(2) of the Income Tax Act, 1961, in light of the amendment brought by the Finance Act, 2012. The Tribunal had dismissed the Revenue's applications, holding that the amendment was prospective from Assessment Year 2013-14 and not applicable to earlier years. The High Court observed that the main appeals had also been disposed of and that appeals against those main appeals were ripe for hearing. Therefore, the Court granted liberty to the appellant/Revenue to agitate the issue concerning the applicability of Section 115JB(2) when the main appeals are taken up for hearing. With this liberty granted, the Tax Case Appeals were disposed of.
The High Court held that the Tribunal was correct in allowing the assessee's appeal. The Court reasoned that the term 'put to use' in the proviso to Section 36(1)(iii) of the Income Tax Act, 1961, applies to a capital asset held to facilitate business activity, which may require preparation after acquisition. In this case, the assessee had demonstrated substantial activities, including demolition of existing structures, indicating the property was put to use. The Tribunal correctly noted that holding inventory in the course of business is itself a business activity and not an extension of business, making the attempt to apply the proviso to the assessee's situation a misinterpretation of the law. The Court also found that the Special Bench decision in Wallstreet Construction Ltd. was not applicable to the facts of this case. Therefore, the disallowance of interest expenditure by the AO was not in accordance with the law. The substantial questions of law were answered against the Revenue.
The High Court noted that it was not necessary to decide the substantial questions of law due to subsequent developments. The Court was informed that the assessee had availed the benefit under the Direct Tax Vivad Se Vishwas Act, 2020, by filing the requisite forms. Consequently, the appeal was disposed of on the ground that the assessee had opted for the Vivad Se Vishwas scheme. The Court directed the Department to process the application under the Act at the earliest and communicate the decision to the assessee. The assessee was granted liberty to restore the appeal if the decision under the Vivad Se Vishwas Act was not in their favour. In such an event, the Registry was directed to entertain a Miscellaneous Petition for Restoration without insisting on a delay condonation application. The substantial questions of law were left undecided.
The High Court condoned the delay in representing the appeals, noting that the appeals were effectively filed on 23.09.2013. The Court found that the cancellation of Form-3 by the Principal Commissioner of Income Tax was not sustainable in law, especially as it was issued while the miscellaneous petitions were pending before the High Court without seeking leave. The Court held that FAQ No. 59 of CBDT Circular No. 21 of 2020 was not applicable because the appeals were considered filed on 23.09.2013, after the delay was condoned. Consequently, the Court quashed the order cancelling Form-3, restored Form-3 to the assessee, and permitted the assessee to file Form-4. The substantial questions of law were left open. The operative direction was to set aside the cancellation order and allow the assessee to proceed under the VSV Scheme.
The High Court found that the Tribunal had not rendered any finding on the correctness of the CIT(A)'s order, which had examined the factual aspects of the newspaper's purpose and its role in educating the masses. The Tribunal's reversal of the CIT(A)'s order merely by applying the decision in Al-Madeena Charitable Trust was considered insufficient. Regarding depreciation, the Tribunal had observed that it could not be a double deduction, reversing the CIT(A)'s finding without addressing the CIT(A)'s reasoning or the assessee's reliance on the Supreme Court's decision in CIT Vs. Vegetable Products Ltd. The Court also noted the assessee's reliance on Punjab & Haryana High Court judgments supporting the claim for depreciation. Consequently, the High Court allowed the appeal, set aside the Tribunal's order, and remanded the matter to the Tribunal for fresh consideration on all issues after hearing the assessee. The substantial questions of law were left open.
The High Court noted that the Direct Tax Vivad Se Vishwas Act, 2020, was enacted to provide for the resolution of disputed tax matters. The learned counsel for the respondent/assessee submitted that the assessee had availed this scheme and had been issued Form-3 on 29.04.2021. Since the assessee had been issued Form-3, the Court found that nothing further survived for adjudication in the appeal. Consequently, the Tax Case Appeal was disposed of on this basis, without deciding the substantial question of law framed. No costs were awarded.
The High Court held that the Tribunal was correct in dismissing the Revenue's appeals. The Court found that the software expenses did not form part of the profit-making apparatus but merely facilitated the assessee's trading operations, enabling more efficient or profitable business conduct. Regarding license fees, the Tribunal found they were valid for only one year and, while useful for various business functions, did not confer an enduring benefit. The Court relied on several precedents, including CIT vs. Raychem RPG Ltd., CIT vs. Toyota Kirloskar Motors (P.) Ltd., CIT, Bangalore vs. Robert Bosh India Ltd., Oriental Bank of Commerce vs. Additional CIT, CIT, Trichy vs. Lakshmi Vilas Bank Ltd., and KGISL Technologies and Infrastructures Private Limited vs. Assistant/Deputy Commissioner of Income Tax, to support the view that software expenses and license fees for software with limited shelf life or that facilitate routine operations without providing enduring benefits are allowable as revenue expenditure. The substantial questions of law were answered against the Revenue.