M/S.m.ct.m.global Investments Private Limited761, Anna Salai,Chennai – 600 002 v. The Asst. Commissioner Of Income Tax,Company Circle Iv(1),Chennai – 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 12.07.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMYANDTHE HON'BLE MRS.JUSTICE R. HEMALATHA Tax Case Appeal Nos.248 to 252 of 2017 M/s.M.Ct.M.Global Investments Private Limited761, Anna Salai,Chennai – 600 002. ...Appellant in all appeals Vs. The Asst. Commissioner of Income Tax,Company Circle IV(1),Chennai – 600 034. ... Respondent in all appeals Tax Case Appeals in Tax Case Appeal Nos.248 to 252 of 2017filed under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Chennai "A" Bench,dated21.10.2016passedinI.T.A.No.1438/Mds/2009,C.O.No.167/Mds/2009 in I.T.A.No.1438/Mds/2009, I.T.A.Nos.1873/Mds/2008, 1954/Mds/2008 and 456/Mds/2009 respectively againstthe order of the Commissioner of Income Tax (A)-V, Chennai-34dated 21.01.2009 for the Assessment year 2001-02 in ITANo.133/2008-09 dated 21.01.2009 as against the Assessment orderof the Income Tax Officer, Company ward-IV(1), Chennai-34,dated.06.03.2006.(ITA.1438/Mds/2009) in PAN/GIR- /MC-6IN TCA No.248 of 2017. Against the order of the cross objection No.167/2009dated.03.10.2009 for the Assessment Year 2001-02 and Assessmentorder of Income Tax Officer IV (1), Chennai-34, dated.30.11.2006in PAN/GIR No. /MC-6 (in ITA 1438/Mds/2009) in TCANo.249/2017. Against the order of the Commissioner of Income Tax (A)-V, Chennai-34, dated.06.02.2008 in ITA No.396/2006-2007 againstthe Assessment Order of the Income Tax Officer, Company Ward-IV(1), Chennai-34, for the Assessment Year 2004-2005dated.30.11.2006 (in TCA No.250/2017) and TCA No.251/2017. Against the order of the Commissioner of Income Tax (A)-V,Chennai-34 in ITA No.370/07-08 dated.15.01.2009 for theAssessment Year 2005-06 against the Assessment order of theAdditional Commissioner of Income Tax, Company Range-IV,Chennai-34, dated.31.12.2007. (in TCA No.252/2017) in PAN : GIRNo. . (Delivered by M.DURAISWAMY, J.) The above appeals filed by the assessee under Section 260Aof the Income Tax Act, 1961 ('the Act' for brevity), aredirected against the order dated 21.10.2016 passed by the IncomeTax Appellate Tribunal, Chennai "A" Bench, ('the Tribunal' forbrevity) in I.T.A.No.1438/Mds/2009, C.O.No.167/Mds/2009 inI.T.A.No.1438/Mds/2009, I.T.A.Nos.1873/Mds/2008, 1954/Mds/2008and 456/Mds/2009 for the assessment years 2001-02, 2001-02,2004-05,2004-05and2005-06respectively.Theappellant/assessee has raised the following substantialquestions of law in the above appeals: 1.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that expenditure incurred byMalaysian Branch cannot be treated as allowableexpenditure even if income from Malaysian Branch wastreated as taxable income in India? https://hcservices.ecourts.gov.in/hcservices/ 2.Whether on the facts and in the circumstancesof the case, expenditure incurred for earning anincome has to be allowed either under the head"business" or under the head "other sources" accordingto the treatment of the income under the head"business" or under the head "other sources" inaccordance with section 37 or under section 56 ofIncome Tax Act, 1961 respectively? 3.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Appellant that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments? 4.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the appellant is liable to payinterest under section 234B of Income Tax Act, 1961? 3.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Appellant that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments? 4.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the appellant is liable to payinterest under section 234B of Income Tax Act, 1961? 5.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the appellant is liable to payinterest under section 234D of Income Tax Act, 1961? T.C.A.No.249 of 2017 : 1.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in upholding the jurisdiction of AssessingOfficer in reopening the assessment under section 147? 2.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal wasright in law in holding that the Assessing Officer has"reason to believe" and is justified in reopening theassessment by issuance of notice under section 148 inthe absence of any new or tangible material? 3.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal wasright in observing that non issuance of notice undersection 143(2) of the Income Tax Act within the time https://hcservices.ecourts.gov.in/hcservices/ stipulated therein, amounts to procedural irregularityand it will not make reassessment nullity in law? 4.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the income earned by MalaysianBranch of the company is taxable in India and nottaxable in Malaysia? 5.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the income by way of interesthad to be classified as "income from other sources andnot "income from business", even if assessee is thenonbanking financial company and the interest incomeearned in the course of its business activity? 6.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the dividend income is liable tobe taxed under the head "income from Other Sources"and not under the head "income from business"? 7.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the income/loss on purchase andsale of stock-in-trade is liable to be taxed under thehead "capital gains". 8.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Appellant that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments? T.C.A.No.250 of 2017 : 1.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the income earned by MalaysianBranch of the company is taxable in India and nottaxable in Malaysia? 2.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Appellant that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments? T.C.A.No.251 of 2017 : 1.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the income by way of interesthad to be classified as "income from other sources"and not "income from business", even if assessee isthe nonbanking financial company and the interestincome earned was out of its investment activity? 2.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Appellant that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments? T.C.A.No.251 of 2017 : 1.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the income by way of interesthad to be classified as "income from other sources"and not "income from business", even if assessee isthe nonbanking financial company and the interestincome earned was out of its investment activity? 2.Whether on the facts and in the circumstancesof the case the Income Tax Appellate Tribunal is rightin law in holding that the dividend income had to beclassified as "income from other sources" and not"income from business"? T.C.A.No.252 of 2017: 1.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the income earned by MalaysianBranch of the assessee company is taxable in India andnot taxable in Malaysia? 2.Whether on the facts and circumstances of thecase, income from Malaysian Branch, should beconsidered as part of "book profits" for the purposeof section 115 JB of Income Tax Act? 3.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the interest income is liable tobe taxed under the head "Other Sources"? 4.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in holding that the dividend income is liable tobe taxed under the head "Other Sources"? https://hcservices.ecourts.gov.in/hcservices/ 5.Whether on the facts and circumstances of thecase, the Income Tax Appellate Tribunal is right inlaw in rejecting the claim of the Assessee that theincome derived in Malaysia constitutes businessincome, even when the Appellant is systematically andcontinuously carrying on business of purchase/sale ofinvestments?” 2. We have heard Ms.Sri Niranjani Srinivasan, learnedcounsel appearing for the appellant/ assessee and Mr.KarthikRanganathan, learned Senior Standing Counsel for therespondent/Revenue. 3. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 4. We are informed by the learned counsel for the appellant/assessee that the assessee had already been issued with Form-3on 27.01.2021 and the learned counsel for the appellant seekspermission of this Court to withdraw the above appeals. 3. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 4. We are informed by the learned counsel for the appellant/assessee that the assessee had already been issued with Form-3on 27.01.2021 and the learned counsel for the appellant seekspermission of this Court to withdraw the above appeals. 5. In the light of the fact that the assessee has alreadyavailed the benefit under the Act, no useful purpose would beserved in keeping these appeals pending. At the same time, theinterest of the assessee in the event the order to be passed bythe Department under the Act is not in favour of the assessee,is to be safeguarded. Accordingly, the Tax Case Appeals standdismissed as withdrawn on the ground that the assessee hasalready been issued with Form-3 and the Department shallprocess the application at the earliest in accordance with thesaid Act and communicate the decision to the assessee at theearliest. As observed, the assessee is given liberty to restorethese appeals in the event the ultimate decision to be taken onthe declaration filed by the assessee under Section 4 of thesaid Act is not in favour of the assessee. If such a prayer ismade, the Registry shall entertain the prayer without insistingupon any application to be filed for condonation of delay inrestoration of these appeals and on such request made by theassessee by filing a Miscellaneous Petition for Restoration, theRegistry shall place such petition before the Division Bench fororders. 6. With this observation, these Tax Case Appeals standdismissed as withdrawn with the aforementioned liberty, andconsequently, the Substantial Questions of Law are left open.No costs. Sd/- Deputy Registrar (CS) //True Copy// mkn Sub Assistant Registrar To 1. The Registrar, Income Tax Appellate Tribunal, Chennai "A" Bench 2. The Commissioner of Income Tax (Appeals V) Chennai - 600034 3. The Asst. Commissioner of Income Tax, Company Circle IV(1), Chennai – 600 034. 4. The Income Tax Officer, Ward (V)(1), Chennai-34 5. The Additional Commissioner of Income Tax, Company Range-IV, Chennai-34 Company Range-IV, Chennai-34 +1CC to M/s. Sriniranjani, Advocate, Sr.No.32727 PPA (CO)K.RK. (06.08.2021)