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 CORAMTHE HON'BLE MR.JUSTICE M. DURAISWAMYANDTHE HON'BLE MRS.JUSTICE R. HEMALATHATax Case Appeal Nos.253 to 255 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.253 to 255 of 2017filed under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Chennai "A" Bench,dated21.10.2016passedinC.O.No.200/Mds/2019inI.T.A.No.1654/Mds/2009, I.T.A.Nos.1102/Mds/2011 and 115/Mds/2012respectively against the order of the Commissioner of Income Tax(A)-V, Chennai-34 in ITA No.415/2008-09 dated 31.03.2009 for theAssessment Year 2006-07 against the order of the AssistantCommissioner of Income Tax, Company Circle IV(1), Chennai-34dated 30.12.2008 (in TCA No.253 of 2017). Against the order of the Commissioner of Income Tax (A)-V,Chennai-34 in ITA No.434/09-10 dated 18.04.2011 for theAssessment Year 2007-2008, against the order of the AssistantCommissioner of Income Tax, Company Circle IV(1), Chennai-34dated 24.12.2008 (in TCA No.254/2017). Against the order of the Commissioner of Income Tax (A)-V,Chennai-34 in ITA No.295/10-11 dated 31.10.2011 for theAssessment Year 2008-2009 against the order of the AssistantCommissioner of Income Tax, Company Circle -IV(1), Chennai-34,dated 31.12.2010 (in TCA No.255/2017) For Appellant : Ms.Sri Niranjani Srinivasan for M/s.G.Baskar in all appeals For Respondent : Mr.Karthik Ranganathan Senior Standing Counsel in all appeals C O M M O N J U D G M E N T(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 C.O.No.200/Mds/2019 in I.T.A.No.1654/Mds/2009,I.T.A.Nos.1102/Mds/2011 and 115/Mds/2012 for the assessmentyears 2006-07, 2007-08 and 2008-09 respectively. Theappellant/assessee has raised the following substantialquestions of law in the above appeals: “T.C.A.No.253 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 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? 3.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"? https://hcservices.ecourts.gov.in/hcservices/ 4.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". 5.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.Nos.254 and 255 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? 4.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". 5.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.Nos.254 and 255 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 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? 3.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? 4.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? 5.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"? 6.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". 7.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? 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 31.01.2021 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, https://hcservices.ecourts.gov.in/hcservices/ 4. We are informed by the learned counsel for the appellant/assessee that the assessee had already been issued with Form-3on 31.01.2021 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, https://hcservices.ecourts.gov.in/hcservices/ 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 shall processthe application at the earliest in accordance with the said Actand communicate the decision to the assessee at the earliest. Asobserved, the assessee is given liberty to restore these appealsin the event the ultimate decision to be taken on thedeclaration filed by the assessee under Section 4 of the saidAct is not in favour of the assessee. If such a prayer is made,the Registry shall entertain the prayer without insisting uponany 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 To1. The Registrar, Income Tax Appellate Tribunal, Chennai "A" Bench 2. The Asst. Commissioner of Income Tax, Company Circle IV(1), Chennai – 600 034.3. The Commissioner of Income Tax (Appeals V) Chennai - 600034+1CC to M/s.Sriniranjani, Advocate, Sr.No.32726 PPA (CO)K.RK. (06.08.2021)