Commissioner Of Income Tax-Ii, Chennai-34 v. M/S.fairmacs Shipstores P. Ltd. Chennai-1

In the High Court of Judicature at Madras Dated : 30.8.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMandThe Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.576 of 2016 Commissioner of Income Tax-II, Chennai-34....AppellantVsM/s.Fairmacs Shipstores P. Ltd.Chennai-1....Respondent APPEAL under Section 260A of the Income Tax Act, 1961 againstthe order dated 11.2.2015 made in ITA.No.761/Mds/2014 on thefile of the Income Tax Appellate Tribunal, Chennai 'C' Bench forthe assessment year 2007-08. against the order of the Commissioner of Income Tax (Appeals)II, Chennai-34, dated 17.12.2013 made in ITA.No. 407/2013-14against the Deputy Commissioner of Income Tax Company Circle –II (1), Chennai dated 31.12.2009 made in PAN/GIR No. AAACF 1406Cfor the Assessment Year 2007-08. For Appellant:Mr.Karthik Ranganathan, SSCfor Mrs.K.G.Usharani assisted byMr.S.Rajesh, SC For Respondent:Mr.R.Sandeep Bagmar Judgment was delivered by T.S.Sivagnanam,J We have heard Mr.Karthik Ranganathan, learned Senior StandingCounsel assisted by Mr.S.Rajesh, learned Standing Counselappearing for the appellant – Revenue and Mr.R.Sandeep Bagmar,learned counsel appearing for the respondent – assessee. 2. This appeal, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 is directed against the order dated11.2.2015 made in ITA.No. 761/Mds/2014 on the file of the IncomeTax Appellate Tribunal, Chennai 'C' Bench for the assessmentyear 2007-08. https://hcservices.ecourts.gov.in/hcservices/ 3. The Revenue has filed this appeal by raising the followingsubstantial questions of law :“i. In the facts and and circumstances ofthe case, whether the Tribunal is justifiedin holding that the loans and advances takenby a concern cannot be subjected to additionas deemed dividend under Section 2(22)(e) ofthe Income Tax Act ? ii. Whether, on the facts andcircumstances of the case, the Tribunal wasright in holding that the assessee companywas not the beneficial owner of shareholdingin its sister concern when both theshareholders are one and the same in boththe companies? Andiii. In the facts and circumstances ofthecase,whethertherestrictiveinterpretation of Section 2(22)(e) by theTribunal does not amount to ignoring theSecond Limb of the Provisions to Section 2(22)(e) wherein the word 'concern' is alsoincluded for the purpose of taxation ofdeemed dividend in its hands ?” 4. The learned Senior Standing Counsel for the appellantsubmits that the above appeal is not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019dated 08.8.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 5. In the light of the said submissions, the above tax caseappeal is dismissed on account of the low tax effect. Thesubstantial questions of law raised are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeal to be heard and decided onmerits. No costs. Rs https://hcservices.ecourts.gov.in/hcservices/ To 1.The Income Tax Appellate Tribunal, Chennai 'C' Bench. Chennai 'C' Bench. 2.The Commissioner of Income Tax, (Appeals) II, Chennai-34. 3.The Deputy Commissioner of Income Tax, Company Circle – II (I), Chennai. Company Circle – II (I), Chennai. +1cc to Mr.Sandeep Bagmar, Advocate, S.R.No. 75989 TCA.No.576 of 2016NMI(CO)GN(12/11/2019)