Commissioner Of Income Tax Ii v. M/S.Harita Gopal Pvt Ltd,

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 22.03.2022 CORAM :

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD TCA.No.346 of 2016 The Commissioner of Income Tax II, 121, Nungambakkam High Road, Chennai - 600 034. ...Appellant/Respondent Vs M/s. Harita Gopal Pvt.Ltd., Jeyalakshmi Estate, 29, Haddows Road, Chennai 600 006.

PAN:AAA CH 0926 K

...Respondent/Appellant

Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, "C" Bench, Chennai, dated 30.12.2015 in I.TA.No.277/Mds/2014 as against the order dated 24.10.2013 of the Commissioner of Income Tax (Appeals) II, Chennai in I.T.A. No. 451/2013-2014 and as against the assessment order dated 27.02.2014 of the Deputy Commissioner of Income Tax, Company Circle II, Chennai for the Assessment year 2008-2009 in PAN/GIR No. AAACH0926K.

For Appellant : Mr. Karthik Ranganathan Senior Standing Counsel For Respondent : Mr.R. Vijayaraghavan for M/s.Subbaraya Aiyar

JUDGMENT

(Judgment of the Court was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 30.12.2015 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.277/Mds/2014, relating to the assessment year 20082009, by raising the following substantial questions of law:-

" (i) Whether on the facts and in the circumstances of the case, the ITAT is justified in holding that the loans and advances taken by a concern cannot be subjected to addition as deemed dividend under section 2(22)(e) of the Act?

(ii) Whether on the facts and in the circumstances of the case, the ITAT was right in holding that the assessee company was not the beneficial owner of shareholding in its sister concern when both the shareholders are one and the same in both the companies?

(iii) Whether on the facts and in the circumstances of the case, the restrictive interpretation of section 2(22)(e) by the ITAT does not amount to ignoring the second limb of provisions to section 2(22)(e) wherein the word "concern" is also included for the purpose of taxation of deemed dividend in its hands?

(iv) Whether on the fact and in the circumstances of the case, the ITAT was right in granting liberty to the Revenue for roping in the shareholders concerned when the law does not provide to do so?

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 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.

s/d- Assistant Registrar True Copy Sub-Assistant Registrar

To

1. The Income Tax Appellate Tribunal, "C" Bench, Chennai,

2. The Commissioner of Income Tax II, 121, Nungambakkam High Road, Chennai - 600 034.

3. The Deputy Commissioner of Income tax, Company Circle - II (2), Chennai - 600 034.

+1 CC to M/s. Subbaraya Aiyar Padmanabhan, Advocate sr 19651. TCA.No.346 of 2016 SVI(CO) SP(05/04/2022)