Madras High Court
M/S.Andal Thirumanakoodam vs The Income Tax Officer on 22 February, 2021
Tax Case No.598 of 2008
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 22.02.2021
CORAM
THE HON'BLE MR.JUSTICE M. DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI
Tax Case Appeal No.598 of 2008
M/s.Andal Thirumanakoodam,
34, North Road, West CIT Nagar,
Chennai – 600 035. ... Appellant
Vs.
The Income Tax Officer,
City Ward II, 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 20.07.2007 passed in I.T.A.No.1139/Mds/2001.
For Appellant : Mr.Sivaraman
For Respondent : Mr.M.Swaminathan,
Senior Standing Counsel
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Tax Case No.598 of 2008
JUDGMENT
(Delivered by M. DURAISWAMY, J)
This appeal filed by the assessee under Section 260A of the
Income Tax Act, 1961 ('the Act' for brevity), is directed against the order
dated 20.07.2007 passed by the Income Tax Appellate Tribunal, Madras
“B” Bench, Chennai ('the Tribunal' for brevity) in
I.T.A.No.1139/Mds/2001 for the Assessment Year 1997-98.
2.The above appeal was admitted on 28.04.2008 on the following
Substantial Questions of Law for consideration:
“1)Whether the Tribunal is correct in law in
concluding that the provisions of Section 45(4) of the Act
was correctly applied by the respondent herein on the facts
of the case inspite of the clause 5 of the Partnership Deed
and provisions in Section 2(47) of the Act defining the term
“transfer”?
2)Whether the Tribunal is correct in law in rejecting
the claim of the appellant on the non-applicability of
Section 45(4) of the Act in view of the claim of depreciation
on the said property by the appellant and payment of
interest on the capital account on the partners in the
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Tax Case No.598 of 2008
computation of taxable total income even though such
claims were admittedly made in view of use of the property
by the appellant in his business as agreed upon between the
partners at the time of formation and subsistence/
3)Whether the Tribunal is correct in law in rejecting
the alternate prayer for the remand of the issues raised
alternatively in assessing the capital gains as short term and
on the valuation for the purpose of fixing the sale
consideration to levy short term capital gains on the facts
and in the circumstances of the case?
4)Whether the Tribunal is correct in not considering
the prayer for refixing the appeal before them for further
hearing as prayed for by the appellant herein vide their
written submissions placed on record after completion of
hearing and before the date of pronouncement of the order?
5)Whether the Tribunal was correct in ignoring the
spirit and intent of Section 45(4) as introduced by Finance
Bill, 1984 as spelt out in the memorandum explaining the
provisions of the said bill, as part of the budget speech of
the Minister of Finance, followed by the explanatory notes
to the Finance Act, 1984 to the effect that the provisions
have been introduced only to prevent the device to avoid tax
on transfer of assets through the medium of a firm, whereas
the case of the assessee there has been no transfer of asset
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Tax Case No.598 of 2008
from one person to another or from one group of persons to
another group but by the partners to themselves, as they
were the same as the time of formation and dissolution of
the firm with the exception of a partner who died during the
currency of the partnership?
6)Whether the Tribunal was correct in mechanically
applying the provisions of Section 45(4) to the facts of the
case though there is no circumstance or fact to show that
there has been an attempt to avoid tax through the medium
of partnership?”
3. We have heard Mr.Sivaraman, learned counsel for the appellant/
assessee and Mr.M.Swaminathan, learned Senior Standing Counsel for
the respondent/ Revenue.
4. It may not be necessary for this Court to decide the Substantial
Question 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 Parliament received the assent of the
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Tax Case No.598 of 2008
President on 17th March 2020 and published in the Gazette of India on
17th March 2020.
5.We are informed by the learned counsel for the appellant/assessee
that the assessee has already filed the requisite Forms 1 & 2 on
30.01.2021 under Section 4 of the Act.
6. 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 this
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 Forms filed by the assessee under Section 4 of the said Act is not
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Tax Case No.598 of 2008
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 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.
7. 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.] [T.V.T.S., J.]
Index : Yes/No 22.02.2021
Internet : Yes
va
To
1. Income Tax Appellate Tribunal, Madras "A" Bench
2.The Income Tax Officer,
City Ward II, Chennai.
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Tax Case No.598 of 2008
M. DURAISWAMY, J.
and
T.V. THAMILSELVI, J.
va
Tax Case Appeal No.598 of 2008
22.02.2021
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