Tca/792/2013 Of Commissioner Of Income Tax v. M/S Cotton Blossom India

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.08.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.792 of 2013 Commissioner of Income-tax,Coimbatore... Appellant/Respondent-vs- M/s.Cotton Blossom India P Ltd.,No.189, TEKIC Tea Nagar,Mudalipalayam, Coimbatore. .. Respondent/Appellant'D'Bench,Chennai,indated27.07.2012madein Appeal under Section 260A of the Income-tax Act, 1961,against the order dated 21.02.2013, on the file of the Income-taxAppellateTribunal'D'Bench,Chennai,inI.T.A.No.2032/Mds/2012 for the assessment year 2006-07 preferredagainst the order passed by the Commissioner of Income Tax(Appeals)-II,Coimbatoredated27.07.2012madeinITA.No.117C/08-09 against the order passed by the AssistantCommissioner of Income Tax, Company Circle, Tirupur dated29.12.2008 for the assessment year 2006-2007. For Appellant :Mr.T.R.Senthil Kumar,Senior Standing Counsel: assisted by Ms.K.G.Usharani,Junior Standing Counsel For Respondent:Mr.R.Venkatanarayana, :for M/s.Subbaraya AiyarPadmanabhan & Ramamani****** JUDGMENT (Delivered by T.S.Sivagnanam, J.) This appeal filed by the appellant/Revenue under Section 260Aof the Income-tax Act, 1961, is directed against the order dated21.02.2013, passed by the Income-tax Appellate Tribunal 'D'Bench, Chennai, in I.T.A.No.2032/Mds/2012 for the assessmentyear 2006-07. 2.The above appeal was admitted, on 10.02.2014, on thefollowing substantial questions of law:- “(i) Whether under the facts and circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that forex derivative contractsentered into by the assessee will not fall underthe definition of 'speculative transaction' andtherefore the loss could be set off against theregular business income of the assessee? (ii) Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wascorrect in holding that the forex derivativetransactions entered into by the assessee ashedging without examining the issue of underlyingexposure? (iii) Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wasright in holding that the transition come underthe eligible transactions as defined in Section 43(5) (d) though no transaction in foreign exchangederivative were carried out by the assesseeelectronically in a recognized stock exchange? (iv) Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wasright in holding that the forex derivatetransaction is neither commodity nor shares? (v) Whether on the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wasright in equating regular onward contractions withoption forex derivatives? (vi) Whether the Tribunal could have reachedthe conclusion that the transaction entered intoby the assessee is not speculative in nature basedon material available before it? (vii) Is the finding of the Income TaxAppellate Tribunal not perverse, as it had notconsidered the factual issues enumerated in para5.11 to 5.18 of the order of the Commissioner ofIncome Tax (Appeals)?” 3.Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counselassisted by Ms.K.G.Usharani, learned Junior Standing Counsel forthe appellant and Mr.R.Venkatanarayan, learned counsel, forM/s.Subbaraya Aiyar, Padmanabhan & Ramamani, for the respondent. 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. 3.Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counselassisted by Ms.K.G.Usharani, learned Junior Standing Counsel forthe appellant and Mr.R.Venkatanarayan, learned counsel, forM/s.Subbaraya Aiyar, Padmanabhan & Ramamani, for the respondent. 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. -s/d- Assistant Registrar(Insp Cell) True Copy Sub-Assistant Registrar abrTo 1.The Assistant Commissioner of Income-tax, Circle-1, Tirupur. 2.The Commissioner of Income-tax (Appeals)-II, Coimbatore. 3.The Income-tax Appellate Tribunal 'D' Bench, Chennai. 4.The Assistant Commissioner of Income Tax,Company Circle, Tirupur+1 cc to Mr.T.R.Senthil Kumar Advocate sr 72305 +1 cc to M/s.Subbaraya Aiyar Padmanabhan Advocate sr72320 pm(co)aa14/10/2019