Commissioner Of Income Tax,Chennai v. Shri P.damodaran

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 10.10.2018Coram The Hon'ble Mr.Justice T.S.SivagnanamandThe Hon'ble Mrs.Justice V.Bhavani Subbaroyan Tax Case Appeal No. 1472 of 2008 Commissioner of Income Tax,Chennai. Vs. Shri P.Damodaran,26/27 Errabalu Chetty Street,Chennai – 600 001. ...Respondent This Tax Case Appeal is filed under Section 260 - A of theIncome Tax Act, 1961 against the order of the Income TaxAppellate Tribunal Madras “B” Bench, dated 14.03.2008 passed inI.T.A.No. 1630/Mds/2005, for the assessment year 2001-02.arising upon the order of Commissioner of Income Tax (Appeals)V, Chennai, dated 29/03/2005, in ITA.No. 165/2004-05 arisingagainst the Assessment order dated 17/03/2004, in PAN/GIR.No.ASP 3681R/WSI-63-P-1, of Income Tax Officer, Company Ward VI(i),Chennai. For Appellant : Mr.Vijay Kumar Punna For Respondent : Mr. I.Dinesh for Mr.G.Baskar This appeal filed by the Revenue under Section 260-A ofIncome Tax Act, 1961 (herein after “the Act” for brevity) isdirected against the order passed by the Income Tax AppellateTribunal Madras 'B' Bench in ITA No. 1630/Mds/2005, for theassessment year 2001-02. 2.The appeal has been admitted, vide order dated12.09.2008, on the following substantial questions of law: “1. Whether in the facts and circumstances ofthe case, the Tribunal was right in holding that theassessee is entitled to deduction u/s 80IB on theprofits of the unit assembling cable jointing kits?12.09.2008, on the following substantial questions of law: “1. Whether in the facts and circumstances ofthe case, the Tribunal was right in holding that theassessee is entitled to deduction u/s 80IB on theprofits of the unit assembling cable jointing kits? https://hcservices.ecourts.gov.in/hcservices/ 2. Whether on the facts and circumstances ofthe case, the Tribunal was right in holding that thelosses of the Chennai unit need not be set off againstthe gross profit to calculate the benefit of Sec. 80IBof the new unit? 3. Whether the facts and circumstances of thecase, the Tribunal was right in holding that merelybecause the assessee had credit balance in his capitalaccount, it cannot be said that borrowed funds werenot used for investment when there is a clear findingby the lower appellate authority that the capitalamount consisted of fixed and current assets and wasnot in liquid form ready for withdrawal?” 3.The learned counsel for the respondent/assessee has fileda memo contending that the appeal filed by the Revenue cannot bepursued further in view of the Circular No. 3/2018, dated11.07.2018, issued by Central Board of Direct Taxes. It isstated in the said memo that three issues arise forconsideration, viz., (i)With regard to the deduction under Section80IB of the Act, (ii)Whether the losses of Chennai Unit need notbe set off against the gross profit, to calculatethe benefit of Section 80IB of the new Unit; and(iii)Whether the dis-allowance of interest was justified. 4.It is submitted that the tax effect insofar as the firstissue is concerned is only Rs.16,33,347/- and on the secondissue, if the losses of the Chennai Unit are set off, thededuction is only further reduced and in the third issue, thetax effect is Rs.1,21,538/-. Thus, the total aggregate taxeffect of the appeal is Rs.19,83,020/-, which includes Surcharge@ 13%, amounting to Rs. 2,28,135/-. The above factual positionhas not been controverted by the respondent/Revenue. 5.Thus, the Revenue cannot pursue this Appeal in viewof the low tax effect. Hence, the Appeal is dismissed and theSubstantial Questions of Law, framed for consideration, are leftopen. No costs. Sd/-Assistant Registrar(CS-V) //True Copy// mrm/msk Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.Income Tax Appellate Tribunal Madras “B” Bench Chennai. Chennai. 2. The Commissioner of Income Tax Appeals V, Chennai. 5.Thus, the Revenue cannot pursue this Appeal in viewof the low tax effect. Hence, the Appeal is dismissed and theSubstantial Questions of Law, framed for consideration, are leftopen. No costs. Sd/-Assistant Registrar(CS-V) //True Copy// mrm/msk Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.Income Tax Appellate Tribunal Madras “B” Bench Chennai. Chennai. 2. The Commissioner of Income Tax Appeals V, Chennai. 3. Income Tax Officer, Company Ward VI (i), Chennai. Company Ward VI (i), Chennai. +1cc to Mr.G.Baskar, Advocate, S.R.No. 70393 Tax Case No. 1472 of 2008 RSK(CO)GN(30/10/2018)