Madras High Court
The Commissioner Of Income Tax vs M/S.True Value Homes (India) Pvt. ... on 5 March, 2021
T.C.A.No.882 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 05.03.2021
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI
T.C.A.No.882 of 2013
The Commissioner of Income Tax,
Chennai. ... Appellant
Vs.
M/s.True Value Homes (India) Pvt. Ltd
TVH Triveni, 21-CV Raman Road,
Alwarpet, Chennai – 600 018. ... Respondent
Appeal preferred under Section 260A of the Income Tax Act,
1961, against the order of the Income Tax Appellate Tribunal, Madras,
"D" Bench, dated 18.03.2013 in I.T.A.No.1843/Mds/2012 for the
Assessment Year 2009-10.
For Appellant : Mr. M.Swaminathan
Senior Standing Counsel
For Respondent : Ms.Sriniranjani Srinivasan
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T.C.A.No.882 of 2013
JUDGMENT
(Judgment was delivered by M. DURAISWAMY, J.)
Challenging the order passed in I.T.A.No.1843/Mds/2012 in
respect of the assessment year 2009-10 on the file of the Income Tax
Appellate Tribunal, Madras, ''D'' Bench, the Revenue has filed the above
appeal.
2.The above appeal was admitted on the following substantial
questions of law:
“Whether on the facts and in the circumstances of the
case, the Tribunal was right in upholding order of
Commissioner of Income Tax (Appeals) in deleting the
disallowance made by the Assessing Officer under Section
36(1)(ii) of the Income Tax Act?”
3.When the appeal is taken up for hearing, Mr.M.Swaminathan,
learned Senior Standing Counsel appearing for the appellant fairly
submitted that the issue involved in the present appeal is covered by the
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T.C.A.No.882 of 2013
decision of this Court dated 02.03.2021 made in T.C.A.No.873 of 2012
[The Commissioner of Income Tax, Chennai Vs M/s.True Value
Homes (India) Pvt. Ltd, TVH Triveni, 21-CV Raman Road, Alwarpet,
Chennai – 600 018], wherein we have held as follows:
“...
4.When the appeal is taken up for hearing,
Mr.M.Swaminathan, learned Senior Standing Counsel
appearing for the appellant fairly submitted that the issues
involved in the present appeal are covered by the decision of
this Court. The learned Senior Standing Counsel further
submitted that so far as the 1st question of law is concerned,
the same is covered by the decision of the Judgment of the
Division Bench of the Delhi High Court reported in (2012)
20 Taxmann.com 647 (AMD Metplast Pvt Ltd v. Deputy
Commissioner of Income Tax] wherein the Delhi High
Court held as follows:-
" ..10.We fail to understand how the aforesaid
observations assist and help the Revenue in the factual
matrix of the present case. Ashok Gupta is the Managing
Director and in terms of the Board resolution is entitled
to receive commission for services rendered to the
company. It is a term of employment on the basis of
which he had rendered service. Accordingly, he was
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T.C.A.No.882 of 2013
entitled to the said amount. Commission was treated as
a part and parcel of salary and TDS has been deducted.
Ashok Gupta was liable to pay tax on both the salary
component and the commission. Payment of dividend is
made in terms of the Companies Act, 1956. Dividend has
tobe paid to all shareholders equally. This position
cannot be disputed by the Revenue. Dividend is a return
on investment and not salary or part thereof. Herein the
consideration in the form of commission which was paid
to Ashok Gupta was for services rendered by him as per
terms of appointment as a Managing Director. In view of
the aforesaid position, we answer the question of law in
negative and in favour of the assessee and against the
Revenue. The appeal is accordingly allowed. No costs”.
5.So far as the 2nd question of law is concerned, the
same is covered by the decision of the Hon'ble Division
Bench of this court reported in 2013(255) CTR 156
[Commissioner of Income Tax v. Sanghvi and Doshi
Enterprise] wherein the Division Bench of this Court
held as follows:-
" ... 32.This takes us to the second question as
regards the completion certificate. As already pointed
out in the preceding paragraphs, the assessee had
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T.C.A.No.882 of 2013
evidently completed the construction as early as
05.03.2006, a fact which is not disputed by the Revenue.
It is also an admitted fact that the approval was granted
for construction, both by the Chennai Metropolitan
Development Authority and the local authority, namely,
Chennai Corporation. The letter of the Chennai
Metropolitan Development Authority according sanction
to the project as early as 23.9.2003 clearly points out
that the sanction was also subject to the approval by the
Corporation. Thus, with the planning details being
subjected to the approval by the Corporation as the
competent local authority and it having certified as to
the completion as early as 28.12.2007, we are satisfied
that the completion being on or before 31.3.2008, the
reliance placed on Explanation (2) to reject the
assessee's case could not be sustained. In any event,
given the fact that the approval, which is an
administrative process, is purely at the hands of the
Statutory Authority concerned, over which, the assessee
could not have any control, the Explanation cannot, in
any manner, have a negative effect on a factual aspect of
the matter, namely, completion of the construction.
Thus, in a case like this, where, the local authority,
being the Corporation, had already certified about the
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T.C.A.No.882 of 2013
completion of the project as per the approved plan, the
fact that one of the Authorities, namely, Chennai
Metropolitan Development Authority had issued a letter
only on 13.6.2008, per se, cannot negative the assessee's
claim for deduction. ...."
6.Further, the Commissioner of Income Tax (Appeals)
in its order has observed that the return filed by
Shri.Ravichandran that he has offered the entire commission
for taxation and paid tax at the maximum marginal rate
without claiming any deduction. Therefore, motive of tax
avoidance is also absent.
7.On a careful consideration of the materials available
on record and also the judgments cited supra, it is clear that
both the questions of law are covered by the judgments of
the Delhi High Court and this Court. Following the same,
we are of the view that both the questions of law have to be
decided against the revenue. Accordingly, the questions of
law are decided against the Revenue and in favour of the
assessee. Hence, the Tax Case Appeal is liable to be
dismissed. Accordingly, the same is dismissed. No costs.”
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T.C.A.No.882 of 2013
4.Following the said judgment, the question of law is decided
against the Revenue and in favour of the assessee. Hence, the Tax Case
Appeal is dismissed. No costs.
[M.D., J.] [T.V.T.S., J.]
Index : Yes/No 05.03.2021
Internet : Yes
va
To
The Income Tax Appellate Tribunal, Chennai, ''D'' Bench
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T.C.A.No.882 of 2013
M. DURAISWAMY, J.
and
T.V. THAMILSELVI, J.
va
T.C.A.No.882 of 2013
05.03.2021
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