2019 (1) TMI 157 - HC - Income Tax

High Court upholds Tribunal decision on interest disallowance in tax appeal

Commissioner of Income Tax Chennai. Versus M/s. Tenneco RC India Pvt. Ltd.

The High Court of Madras dismissed the Revenue's appeal under Section 260A of the Income-tax Act, 1961 against the Tribunal's decision to delete interest ... Disallowance of interest on the advance given to the subsidiary company - Held that:- For the assessment year 1999-2000, the Division Bench has held in favour of the assessee stating that Revenue does not dispute the fact that the advancing of funds by the assessee into the sister concern was in terms of the BIFR's order. That being the case, no useful purpose would be served by again directing a remand on the merits of the claim of the assessee - decided against revenue Issues:1. Appeal filed by Revenue under Section 260A of the Income-tax Act, 1961 against the Tribunal's order.2. Substantial question of law regarding the deletion of interest disallowance on advance to subsidiary company.Analysis:The High Court of Madras, consisting of Mr. Justice T.S. Sivagnanam and Mr. Justice N. Sathish Kumar, heard an appeal filed by the Revenue under Section 260A of the Income-tax Act, 1961 against the order of the Income Tax Appellate Tribunal Bench 'A', Chennai. The Tribunal's order dated 16.11.2010 in ITA.No.1895/Mds/2009 for the assessment year 2003-04 was challenged. The appeal was admitted based on the substantial question of law, questioning the Tribunal's decision to delete the disallowance of interest on the advance given to the subsidiary company.During the proceedings, M/s.V.Pushpa represented the appellant/revenue, while Mr. R. Kumar appeared for the respondent/assessee. The counsel for the respondent referred to a previous decision by the Division Bench in TC(A).No.18 of 2010 dated 01.07.2013, which ruled in favor of the assessee for the assessment year 1999-2000. The Division Bench's order emphasized that the advancing of funds to the sister concern was in accordance with the BIFR's order, and hence, no remand on the merits of the claim was necessary.In light of the previous decision and the facts presented, the High Court dismissed the tax case appeal. Consequently, the substantial question of law was answered against the appellant, and no costs were awarded in this matter. The judgment upheld the Tribunal's decision to delete the interest disallowance on the advance provided to the subsidiary company, based on the legal principles and precedents cited during the proceedings.