Revenue's tax appeal on taxation of interest earned from borrowed funds and retrospective applicability of the Finance Act, 2022 explanation to Section 14A was dismissed as covered by low tax effect per Circular No.9/2024 dated 17.09.2024, with all substantial questions of law kept open.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
T.C.A.No.217 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.11.2024
CORAM :
THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN
T.C.A.No.217 of 2024
Principal Commissioner of Income Tax Corporate Circle – 2(2) Chennai – 600 034.
.. Appellant
Vs.
M/s.IL & FS Tamil Nadu Power Company Ltd. New No.2, (Old No.21) 4th Floor, KPR Tower 1st Street, Subba Rao Avenue College Road, Chennai – 600 006. PAN: AABCF 1176A
.. Respondent
Prayer: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal “A” Bench, Chennai, dated 03.08.2022 passed in
I.T.A.No.2018/CHNY/2019.
For the Appellant : Mrs.R.Hemalatha Senior Standing Counsel
For the Respondent : Mr.Joseph Prabakar
JUDGMENT
(Order of the Court was made by R.SURESH KUMAR, J.) The present tax case appeal was admitted on 04.10.2024 on
the following substantial questions of law:-
"i. In the facts and circumstances of the case and
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in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Supreme Court of India in the case of M/s.CIT Vs. Bokaro Steel Ltd., 236 ITR 315 (SC) to the case of the assessee where the facts are completely different?
ii. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Supreme Court of India in the case of M/s.CIT Vs.Karnal Cooperative Sugar Mills, [2000] 243 ITR 2 to the case of the assessee where the facts are completely different?
iii. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in holding the interest earned by the assessee as capital receipts instead of "income from other sources" as the deposits from which interest was earned was sourced from borrowed funds?
iv. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in not applying the decision of the Hon'ble Supreme Court of India in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CIT [1997] 227 ITR 172 (SC) which is squarely applicable to the case?
v. In the facts and circumstances of the case and in law, whether the Ld.ITAT had committed an error in applying the decision of the Hon'ble Madras High Court in the case of CIT Vs. Chettinad Logistics (P) Ltd., [2017] 80 taxmann.com 221 and Redington (India) Ltd., Vs. Addl. CIT, [2017] 77 taxmann.com 257 to the case of the assessee ignoring the amendment brought in by Finance Act, 2022 in Section 14A by way of insertion of an explanation?
vi. Whether the amendment made to Section 14A
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by Finance Act, 2022 by way of insertion of explanation is applicable retrospectively as it is only clarificatory in nature?"
appearing for the appellant Revenue that this matter is covered under the Low Tax Effect as per the recent Circular dated 17.09.2024, in Circular No.9/2024.
low tax effect and the substantial questions of law raised in this appeal are kept open to be decided at the later point of time. There shall be no order as to costs.
Neutral Citation:Yes/No
drm
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T.C.A.No.217 of 2024
R. SURESH KUMAR, J. AND C. SARAVANAN, J.
(drm)
T.C.A.No.217 of 2024
12.11.2024
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Colour shows how this judgement treated each authority
CIT Vs. Bokaro Steel Ltd.Referred
236 ITR 315 (SC)
CIT Vs. Karnal Cooperative Sugar MillsReferred
[2000] 243 ITR 2
Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CITReferred
[1997] 227 ITR 172 (SC)
CIT Vs. Chettinad Logistics (P) Ltd.Referred
[2017] 80 taxmann.com 221
Redington (India) Ltd. Vs. Addl. CITReferred
[2017] 77 taxmann.com 257
2 provisions across 1 enactments
Principal Commissioner of Income Tax Corporate Circle – 2(2) Chennai
M/s. IL & FS Tamil Nadu Power Company Ltd.
R. Suresh Kumar
C. Saravanan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
