Commissioner Of Income Tax,Chennai v. M/S.madras Refineries Ltd.,Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.07.2020 CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.981 of 2019 Commissioner of Income Tax,Chennai... Appellant versus M/s.Madras Refineries Ltd.,Chennai... Respondent Tax Case Appeal filed under Section 260A of the IncomeTax Act, 1961, against the order made in ITA No.1497/Mds/93dated 29.10.2002 passed by the Income Tax Appellate Tribunal,Madras 'B' Bench, for the Assessment Year 1990-91, andagainst the order of the commissioner of Income Tax(Appeals),Madras-34, dated 28.10.1994 made in Apeal No.121/93-94, andagainst the order of the Deputy Commissioner of Income Tax,Special Range-VII, Madras-35 dated 27-09-93, made in No.47-003-CX-1137. For Appellant: Mrs.R.Hemalatha Senior Standing Counsel For Respondent : Mr.R.Vijayaraghavan T.S.SIVAGNANAM, J.This appeal by the revenue filed under Section 260A ofthe Income Tax Act, 1961 (the 'Act' for brevity), is directedagainst the order dated 29.10.2002 in ITA No.1497/Mds/93 onthe file of the Income Tax Appellate Tribunal, Madras 'B'Bench, for the Assessment Year 1990-91. 2. The appeal has been filed by the revenue raising thefollowing Substantial Questions of Law:“Whetherinthefactsandcircumstances of the case, the Tribunal wasright in upholding the order of the CIT (A) https://hcservices.ecourts.gov.in/hcservices/ 1 that interest on deposits in IDBI should betreated as business income purely becausethe deposits were made to comply withstatutory provisions under the Income TaxAct?” 3. We have heard Mrs.R.Hemalatha, learned Senior StandingCounsel for the appellant/Revenue and Mr.R.Vijayaraghavan,learned counsel for the respondent/assessee. 4. The assessee, a joint venture company with theGovernment of India, claimed relief under Section 32AB of theAct. The Assessing Officer did not agree the claim and the assessee filed anappeal before the Commissioner of Income Tax (Appeals)-VII,Chennai, hereinafter referred to as 'CIT(A)'. The CIT(A) byan order dated 28.10.1994 held that the interest received bythe assessee from the Fixed Deposit from IDBI should betreated as part of the business income only. The revenuefiled appeal before the tribunal, which was dismissed by theimpugned order. Challenging the same, the revenue is beforethis Court raising the above question and contending that itis the substantial question of law to be decided by thisCourt. 5. The Assessing Officer denied the relief to theassessee on the ground that the items are not plant andmachineries and they are only pipes, steel plates, M.S.angles,etc., and these items do not support purchase of any new plantor machinery and therefore, it is not classified under Section32AB of the Act. 6. The CIT(A) examined the correctness of this factualfinding by taking note of the materials placed before theCourt and also looking into whether the amount claimed by theassessee can be stated to be utilised for purchase of newplant and machinery. After referring to the dictionarymeaning of 'purchase', the CIT(A) concluded that suchtransaction would not only be direct buying of the plant ormachinery for consideration, which is contemplated by theterm 'purchase' and the purchase can include either buying theitem concerned directly or obtaining it by labour or acquiringby other means. Accordingly, the relief was granted to theassessee. 7. Correctness of the finding rendered by the CIT(A) wastested by the tribunal and the tribunal confirmed the findingby observing that the CIT(A) has restored the issue to thefile of the Assessing Officer with a direction to verify theevidences to be furnished by the assessee, to show that thepurchase of machinery was made during the period under consideration, so as to be eligible for the deduction of theclaim under Section 32AB of the Act and pass consequentialorders. 7. Correctness of the finding rendered by the CIT(A) wastested by the tribunal and the tribunal confirmed the findingby observing that the CIT(A) has restored the issue to thefile of the Assessing Officer with a direction to verify theevidences to be furnished by the assessee, to show that thepurchase of machinery was made during the period under consideration, so as to be eligible for the deduction of theclaim under Section 32AB of the Act and pass consequentialorders. 8. Further, the tribunal noted that the CIT(A) has heldthat the interest received by the assessee from the depositsmade in IDBI should be treated as business income only. Thesefindings of fact coupled with law was affirmed by the tribunalin the impugned order and we agree with the elaboratereasoning given by the CIT(A). Thus, we find that nosubstantial question of law arises for consideration in thisappeal. 9. In the result, the Tax Case Appeal filed by therevenue is dismissed and the order passed by the tribunal isconfirmed. The substantial question of law as framed forconsideration is not answered, as on facts, we find that nosubstantial question of law arises for consideration in thisappeal. No Costs. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar arsTo1.The Commissioner of Inceom Tax(Appeals) Chennai-34. 2.The Income Tax Appellate Tribunal, Madras 'B'Bench, Chennai. 3.The Deputy commissioner of Income Tax, Special Range VII, Madras-34. +1cc to Mr.T.Ravi Kumar, Advocate SR.24725 TCA No.981 of 2019BR(CO)CB(23/09/2020)