2019 (5) TMI 1272 - HC - Income Tax

Maintainability of appeal - monetary limit - HELD THAT - When the matter is taken up for admission, the learned Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.3/2018 dated 11.7.2018 wherein it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed RS.50 lakhs. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Tax Case filed by the Revenue is dismissed as not pressed, keeping open the substantial questions of law for determination in an appropriate case.

Issues:
1. Assessment of sale proceeds of land as business income
2. Taxation of sale proceeds as long term capital gains
3. Consideration of additional evidence by the assessing officer
4. Treatment of advanced amounts as bad debts
5. Deduction of interest paid towards loan for purchase of cards
6. Treatment of long term capital gains reported as Nil

Analysis:

1. Assessment of sale proceeds of land as business income:
The High Court addressed the issue of whether the sale proceeds of land at Sholinganallur and Thirupathy, divided into plots, should be assessed as business income. The Tribunal's decision was challenged by the Revenue. The Court examined the facts and circumstances to determine the correctness of the Tribunal's ruling.

2. Taxation of sale proceeds as long term capital gains:
Another issue raised was whether the sale proceeds of the land could be subjected to long term capital gains tax. The Tribunal's decision on this matter was also under scrutiny. The Court analyzed the facts and circumstances of the case to ascertain the appropriateness of the Tribunal's ruling in this regard.

3. Consideration of additional evidence by the assessing officer:
The Tribunal's failure to consider the ground raised by the Revenue regarding the additional evidence in the form of VAO Certificate before the CIT(A) was a significant issue. The Court examined whether the assessing officer should have been given an opportunity to review this evidence and its potential impact on the case.

4. Treatment of advanced amounts as bad debts:
The Tribunal's decision to treat the amounts advanced by the assessee in the form of finance transactions as allowable bad debts, despite not being in the business of financing, was questioned. The Court analyzed the grounds for writing off these amounts and their implications for tax treatment.

5. Deduction of interest paid towards loan for purchase of cards:
The eligibility of the assessee for deduction of interest paid towards a loan for the purchase of cards was disputed. The Court examined whether the assessee's plea before the CIT(A) for the deduction was admissible, considering it was not raised before the assessing officer.

6. Treatment of long term capital gains reported as Nil:
The Tribunal's consideration of the letter from the assessee stating that the long term capital gains reported in its return may be treated as Nil was also a subject of contention. The Court reviewed whether the assessing officer had appropriately evaluated this aspect in the case.

In conclusion, the High Court dismissed the Tax Case filed by the Revenue due to the tax effect being below the prescribed monetary limit. However, the substantial questions of law raised in the case were kept open for determination in a suitable future case.

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