Madras High Court
M/S.Rane Brake Linings Limited vs The Deputy Commissioner Of Income ... on 20 April, 2021
Tax Case Appeal No.246 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 20.04.2021
CORAM
THE HON'BLE MR.JUSTICE M. DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R. HEMALATHA
Tax Case Appeal No.246 of 2019
M/s.Rane Brake Linings Limited,
(now known as Rane Brake Lining Limited)
Plot No.30, Industrial Estate,
Ambattur,
Chennai – 600 058. ... Appellant
Vs.
The Deputy Commissioner of Income Tax,
Large Taxpayer Unit-II,
Now Corporate Circle 5(1),
Chennai. ... Respondent
Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961
against the order of the Income Tax Appellate Tribunal, Madras “A” Bench,
dated 15.02.2018 passed in I.T.A.No.1594/Mds/2014.
For Appellant : Mr.R.Venkata Narayanan
for M/s.Subbaraya Aiyar Padmanabhan
For Respondent : Mrs.R.Hemalatha
Standing Counsel
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Tax Case Appeal No.246 of 2019
JUDGMENT
(Delivered by M. DURAISWAMY, J)
The appeal filed by the assessee under Section 260A of the Income Tax
Act, 1961 ('the Act' for brevity), is directed against the order, dated 15.02.2018,
passed by the Income Tax Appellate Tribunal, Madras “A” Bench, Chennai
('the Tribunal' for brevity) in I.T.A.No.1594/Mds/2014 for the Assessment Year
2001-02. The above appeal was admitted on 09.11.2020 on the following
Substantial Questions of Law:
“1.Whether the order of the Tribunal is perverse in holding
that the assessee has invested its interest bearing funds in equity
shares earning dividend income which is exempt from tax and
that these investments were not made for strategy purposes or due
to commercial expediency?
2.Whether the Tribunal was right in law in confirming the
disallowance of proportionate interest expenditure as relating to
investment of borrowed funds in group companies without
appreciating that the Appellant had sufficient funds by way of
retained earnings and capital for making the investment in the
group companies and the assessee had not used any borrowed
amount for making investment?
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Tax Case Appeal No.246 of 2019
3.Whether the Tribunal was right in law in not
appreciating the Principle that if there are funds available both
interest-free and overdraft and/or loans taken, then a
presumption would arise that investments would be out of the
interest-free fund generated or available with the company, if the
interest-free funds were sufficient to meet the investments.
4.Whether the Tribunal was right in law in confirming the
order of lower authorities sitting in judgment on matters relating
to earlier years in the current assessment year, where the
assessments have been completed and the appellant filed details
in support of its claim that it had cash from operating activities
and reserves and surplus for making investments?"
2. We have heard Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar
Padmanabhan, learned counsel for the appellant/ assessee and
Mrs.R.Hemalatha, learned Standing Counsel for the respondent/Revenue.
3. It may not be necessary for this Court to decide the Substantial
Questions of Law framed for consideration on account of certain subsequent
developments. The Government of India enacted the Direct Tax Vivad Se
Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax
and for matters connected therewith or incidental thereto. The Act of the
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Tax Case Appeal No.246 of 2019
Parliament received the assent of the President on 17 th March 2020 and
published in the Gazette of India on 17th March 2020.
4. We are informed by the learned counsel for the appellant/assessee that
the assessee has already filed the requisite Forms 1 & 2 on 08.01.2021 under
Section 4 of the Act.
5. In the light of the fact that the assessee has already availed the benefit
under the Act, no useful purpose would be served in keeping the appeal
pending. At the same time, safeguarding the interest of the assessee in the
event the order to be passed by the Department under the Act is not in favour of
the assessee. Accordingly, the Tax Case Appeal stands disposed of on the
ground that the assessee has already filed the requisite Forms 1 & 2 and the
Department shall process the application at the earliest in accordance with the
said Act and communicate the decision to the assessee at the earliest. As
observed, the assessee is given liberty to restore the appeal in the event the
ultimate decision to be taken on the declaration filed by the assessee under
Section 4 of the said Act is not in favour of the assessee. If such a prayer is
made, the Registry shall entertain the prayer without insisting upon any
application to be filed for condonation of delay in restoration of the appeal and
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Tax Case Appeal No.246 of 2019
on such request made by the assessee by filing a Miscellaneous Petition for
Restoration, the Registry shall place such petition before the Division Bench
for orders.
6. With this observation, the Tax Case Appeal stands disposed of with
the aforementioned liberty and consequently, the Substantial Questions of Law
are left open. No costs.
[M.D., J.] [R.H., J.]
20.04.2021
(2/2)
Index : Yes/No
Internet : Yes
mkn
To
1.The Income Tax Appellate Tribunal, Madras “A” Bench
2.The Deputy Commissioner of Income Tax,
Large Taxpayer Unit-II,
Now Corporate Circle 5(1),
Chennai.
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Tax Case Appeal No.246 of 2019
M. DURAISWAMY, J.
and
R. HEMALATHA, J.
mkn
Tax Case Appeal No.246 of 2019
20.04.2021
(2/2)
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