Commissioner Of Income Tax,Chennai v. Chettinad Cement Corporation Ltd.,603 Anna Salai, Chennai – 600 006

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR.JUSTICE T.S.SIVAGNANAMANDTHE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case No. 1243 of 2008 Commissioner of Income Tax,Chennai....Appellant/Respondent Vs. Chettinad Cement Corporation Ltd.,603 Anna Salai, Chennai – 600 006....Respondent/Appellant Prayer: The Tax Appeal is filed under Section 260 - A of theIncome Tax Act, 1961 against the order of the Income TaxAppellate Tribunal Madras “A” Bench, dated 30.11.2007 passed inI.T.A.No. 2335/Mds/2006,for the assessment year 2001-02, againstthe order dated 18.10.2006, made in I.T.A.211/2006-07/A-III bythe Commissioner of Income Tax (Appeal)-III, Chennai, preferredagainst the order dated 13.03.2006 by Assistant Commissioner ofIncome Tax, Company Circle I(3), Chennai preferred against theassessment order, dated 27.2.2004, made in PAN.GIRNo. by the Assistant Commissioner of Income TaxCompany Circle 13(1/C), Chennai. For Appellant : Mrs.K.G.Usha Rani for Mr. Karthik Ranganathan For Respondent : Mr.T.R.Senthil Kumar This appeal filed by the Revenue, under Section 260-A ofIncome Tax Act, 1961 (herein after “the Act” for the sake ofbrevity) is directed against the order passed by the Income TaxAppellate Tribunal 'A' Bench in ITA No. 2335/Mds/2006, dated30.11.2007 for the assessment year 2001 to 2002. 2.The appeal has been admitted, vide order dated 20.08.2008,on the following substantial question of law: https://hcservices.ecourts.gov.in/hcservices/ “Whether on the facts and circumstances of the case,the Tribunal was right in deleting the penalty underSection 271(1)(C)?” 3.Before we proceed to answer the Substantial Question ofLaw, we may note that in the quantum appeal the assessee hassucceeded before this Court in TCA No.757 of 2007. The saidappeal was filed challenging the order passed by the Tribunal,which rejected the claim made by the assessee for deduction underSection 80IA(4)(iv) of the Income Tax Act. 4.The said appeal filed by the assessee was clubbed withother appeals filed by another assessee and all the appeals wereallowed by a common judgment dated 18.01.2012. The DivisionBench while allowing the appeals held that the SubstantialQuestions of Law, which have been framed for consideration, arecovered by the decision of this Court in Velayudhaswamy SpinningMills (P) Ltd., Vs. Assistant Commissioner of Income Tax,[(2010)231 CTR(Mad) 368]. Thus, the question would be as to whether theRevenue can pursue the present appeal, which is an appeal filedagainst the order challenging the penalty imposed under Section271(1)(c) of the Act. The answer to the question should benegative, i.e., in favour of the assessee and against theRevenue. 5.We may also add that the Tribunal has considered thematter in a proper perspective, took note of the factual positionand held that at the relevant point of time there were twointerpretations which were possible with regard to the deductionthat can be claimed under Section 80IA(4)(iv). In suchcircumstances, the Tribunal has rightly held that the case of theassessee cannot be brought within the ambit of concealment andfurnishing of inaccurate particulars with deliberate intention,to avoid payment of tax. 6.The other issue is pertaining to the amounts paid to theemployees under the Voluntary Retirement Scheme and whether suchexpense was an allowable expense or not. 5.We may also add that the Tribunal has considered thematter in a proper perspective, took note of the factual positionand held that at the relevant point of time there were twointerpretations which were possible with regard to the deductionthat can be claimed under Section 80IA(4)(iv). In suchcircumstances, the Tribunal has rightly held that the case of theassessee cannot be brought within the ambit of concealment andfurnishing of inaccurate particulars with deliberate intention,to avoid payment of tax. 6.The other issue is pertaining to the amounts paid to theemployees under the Voluntary Retirement Scheme and whether suchexpense was an allowable expense or not. 7.At the relevant point of time, the law which held thefield was as laid down by this Court in the case of CIT Vs.George Oakes Ltd. [(1992) ITR 288 (Mad)]. This decision wasrendered following the decision of the Hon'ble Supreme Court inSassoon J.David & Co. (P) Ltd. vs. CIT [(1979) 118 ITR 261 (SC)]as well as the earlier decision of the Division Bench of thisCourt in CIT Vs. Sri Ramvilas Service Ltd. [(1995) 211 ITR 763(Mad)]. The said decision in the case of George Oakes Ltd., wasfollowed by the Division Bench of this Court in Commissioner ofIncome Tax vs. Simpson & Co. Ltd., [(1998) 230 ITR 0703]. 8.In order to get over the legal embargo which permittedsuch expense to be allowable as a deduction, the Income Tax Actwas amended and Section 35DDA was introduced by Finance Act, 2001w.e.f 01.04.2001. Thus, in our considered view, the Tribunal wasjustified in setting aside the penalty levied on the assessee onaccount of the fact that the assessee had acted in terms of thelaw prevailing at the relevant point of time. Thus, for the abovereasons the Revenue has not made out any grounds to interferewith the order passed by the Tribunal. 9.In the result the Tax Case Appeal filed by the Revenue isdismissed and the Substantial Question of Law is answered againstthe Revenue. No costs. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant Registrarmrm/mskTo1.The Income Tax Appellate Tribunal Madras “A” Bench Chennai.2. The Commissioner of Income Tax (Appeals-III), Chennai.3. The Assistant Commissioner of Income Tax, Company Circle I(3), Chennai. 4. The Assistant Commissioner of Income Tax, Company Circle I e(1/c), Chennai. + 1 cc toMr. S.Sridhar, Advocate Sr.70703/2018Tax Case No. 1243 of 2008 SSV(CO)EU(02/11/2018) https://hcservices.ecourts.gov.in/hcservices/