Tca/245/2017 Of Commissioner Of Income Tax 3 v. Sp Apparels Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Commissioner of Income Tax 3,No.63, Race Course Road,Coimbatore-641 018... Appellant M/s.SP Apparels Ltd.,No.39-A, VOC Extension Street,Kaikattipudur, Avinashi-641 601. PAN: AAJ CS 4031 P.. RespondentAppeal under Section 260A of the Income-tax Act, 1961,againsttheorderdated30.09.2016,madeinI.T.A.No.1465/Mds/2016 on the file of the Income Tax AppellateTribunal 'B' Bench, Chennai for the assessment year 2010-11,against the order of the Commissioner of Income Tax Appeals 3dated 30.12.2015 in ITA No.84/13-14in the assessment year 2010-2011, against the order of the Deputy Commisisoner of Income TaxCompany Circle Tiruppur dated 30.03.2013 in PAN No GIRNo. in the assessment year 2010-11. This appeal filed by the Revenue under Section 260A of theIncome-tax Act, 1961 is directed against the order dated30.09.2016, made in I.T.A.No.1465/Mds/2016 on the file of theIncome Tax Appellate Tribunal 'B' Bench, Chennai for theassessment year 2010-11. https://hcservices.ecourts.gov.in/hcservices/ 2.The appeal has been filed raising the following substantialquestions of law:- “(i) Whether on the facts and in thecircumstances of the case, the Appellate Tribunalis correct in deleting the disallowance of forexderivative loss arising on account of loss onforex derivative transactions by treating it as atrading loss? (ii) Whether on the facts and in thecircumstances of the case, the Tribunal isjustified in law in holding that the loss onderivative transactions is trading loss therebyover viewing the fact that when no actual deliveryhas taken place, the transactions in question fallwithin the definition of speculative transactionas per Section 43(5) of the Income Tax Act?” (iii) Whether on the facts and in thecircumstances of the case, the Tribunal isjustified in law in holding that the forexderivative transactions of the assessee haveproximity to the export turnover thereby impliedlyruling that the issue is covered by proviso (a) toSection 43(5), when the proviso clearly mandatesthat to be categorised as hedge, the transactionsshould only be in respect of goods or merchandisemanufactured or traded by the assessee? and(iv) Whether on the facts and in thecircumstances of the case, the Tribunal is legallycorrect by holding that the forex derivativetransactions carried on by the assessee through aBanker as Over the Counter Transactions (OTC) andnot through a recognized stock exchange are alsocovered by proviso (d) to Section 43(5) when thepre-conditions laid by the Explanation to the saidproviso is not satisfied to constitute it as aneligible transaction?” 3.Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counselassisted by Ms.K.G.Usharani, learned Standing Counsel for theappellant – and Mr.N.V.Balaji, learned counsel for therespondent. 4.The learned Senior Standing Counsel for the appellantsubmits that the above appeal is not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019,dated 08.08.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 5.In the light of the said submissions, the above tax caseappeal is dismissed on account of the low tax effect. Thesubstantial questions of law framed are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeal to be heard and decided onmerits. No costs. Sd/-Assistant Registrar(CS-V) 5.In the light of the said submissions, the above tax caseappeal is dismissed on account of the low tax effect. Thesubstantial questions of law framed are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeal to be heard and decided onmerits. No costs. Sd/-Assistant Registrar(CS-V) //True copy//Sub Assistant RegistrarabrTo1.The Income Tax Appellate Tribunal 'B' Bench, Chennai.2. The Commissioner of Income Tax Appeals 3, Coimbatore3. The Deputy Commissioner of Income Tax Company Circle, Tiruppur+1cc to Mr.N.V.Balaji, Advocate SR.No.76079+1cc to Mr.T.R.Senthil Kumar, Advocate SR.No.75130MG(CO)GMY(07/11/2019) T.C.A.No.245 of 2017 https://hcservices.ecourts.gov.in/hcservices/