The Commissioner Of Income Tax, Virudhunagar Circle, Virudhunagar v. M/S.rajasekar Textiles, Chatrapatti

In the High Court of Judicature at MadrasDated : 30.8.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMandThe Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.235 of 2016 The Commissioner of Income Tax, Virudhunagar Circle,Virudhunagar...Appellant/AppellantVs M/s.Rajasekar Textiles, Chatrapatti.626102....Respondent/RespondentPAN. AACFR8769B APPEAL under Section 260A of the Income Tax Act, 1961 againstthe order dated 30.9.2015 made in ITA.No.1624/Mds/2015 on thefile of the Income Tax Appellate Tribunal, Chennai 'C' Bench forthe assessment year 2009-10 against the order of theCommissioner of Income Tax (Appeals)3 Madurai dated 30.04.2018in I.T.A. No. 355/2011-2012 and against the order of the DeputyCommissioner of Income Tax, Circle I, Railway Feeder Road,Virudhunagar dated 21.12.2011 in P.A. AACFR8769B. For Appellant : Mr.M.Swaminathan, SSC assisted by Ms.V.Pushpa, SCFor Respondent: Mr.A.S.Sriraman for Mr.S. Sridhar Judgment was delivered by T.S.Sivagnanam,J We have heard Mr.M.Swaminathan, learned Senior StandingCounsel assisted by Ms.V.Pushpa, learned Standing Counselappearing for the appellant – Revenue and Mr.A.S.Sriraman,learned counsel appearing for the respondent – assessee. 2. This appeal, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 is directed against the order dated30.9.2015 made in ITA.No. 1624/Mds/2015 on the file of theIncome Tax Appellate Tribunal, Chennai 'C' Bench for theassessment year 2009-10. https://hcservices.ecourts.gov.in/hcservices/ 3. The appeal was admitted on 28.3.2016 on the followingsubstantial questions of law : “i. Whether on the facts andcircumstances of the case and in law, theIncome Tax Appellate Tribunal was correct indeleting the addition made under Section 2(22)(e) of the Income Tax Act, which clearlyprovides that not only the payment by aprivate company by way of advance toshareholders, but also payment by lenders toborrowing firm in which shareholders havingsubstantial shareholding in lending companyand the partners of borrowing firm arecommon will attract deemed dividend underSection 2(22)(e) ? and ii. Whether on the facts andcircumstances of the case and in law, theIncome Tax Appellate Tribunal was correctand justified in holding that thetransaction between the lender company andthe assessee firm are in the course ofbusiness transactions and amount received bythe assessee firm are only towardscommercial transaction, which is notsupported by invoice of borrowing firm?” 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.17/2019dated 08.8.2019 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(CS-I) True Copy Sub-Assistant Registrar To 1.The Income Tax Appellate Tribunal, Chennai 'C' Bench. 2.The Deputy Commissioner of Income TaxCircle I, Railway Feeder RoadVirudhunagar 626 001.Circle I, Railway Feeder RoadVirudhunagar 626 001. 3.The Commissioner of Income Tax (Appeals)3MaduraiMadurai +1 CC to Mr.S.Sridhar, Advocate sr 76086. +1 CC to Mr.M.Swaminathan, Advocate sr 75846. TCA.No.235 of 2016KK(CO)SP(12/11/2019)