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The Commissioner of Income Tax V/S Matrix Laboratories Ltd

    Tax Case Appeal No. 1015 of 2008

    Decided On, 01 August 2018

    At, High Court of Judicature at Madras


    For Petitioner: D. Prabhu Mukunth Arunkumar

Judgment Text

1. This appeal by the revenue is directed against the order of Income Tax Appellate Tribunal Madras 'A' Bench, dated 31.01.2008 in ITA No. 1029/Mds/2007 for the Assessment Year 2000-01.

2. The appeal was admitted on the following substantial question of law:

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in allowing deduction under section 80HHC of the Income Tax Act, on the basis of book profits under section 115JA of the Act, and not on the basis of eligible profits under section 80HHC of the Act as per normal computation ?'

3. It may not be necessary for this Court to take a decision on the substantial question of law framed in the light of the low tax effect in the present appeal. This issue was considered by this Court in the case of Commissioner of Income Tax vs. N. Meenakshisundaram in T.C.(A) Nos. 868 & 869 of 2008 dated 23.04.2018, by taking note of the Circular Instructions issued by the Central Board of Direct Taxes (CBDT) and also taking note of the submissions of the Revenue, the relevant portions of which are quoted hereunder:

"10. An argument was advanced by the learned Senior Standing Counsel for the Revenue that the circular can have effect only, while filing the appeal and not while hearing of the appeal and would have no impact on the appeals, which are admitted and pending. However, in the Circular issued in the year, 2015, it has been made clear that, it will apply to pending appeals as well. In respect of the earlier circulars, it would be relevant to take note of the decision of the Hon'ble Supreme Court in Mathew M. Thomas vs. Commissioner Of Income-Tax [: (1999) (III) ELT 4 SC] wherein, the Hon'ble Supreme Court, while considering the effect of Circular No. 445, dated 16.05.1986, pointed out that Circular No. 455 : dated 16.5.1986 issued by the C.B.D.T. is applicable to all pending proceedings which have not attained finality under Section 269I of the Act as defined in the explanation to the said Section.


14. Therefore, the Circular has to be understood as part of the litigation policy of the Government of India to reduce the litigation and to bring down the number of Appeals, which are pending before the Court and also ensure that the Appeals are not preferred by the Department without proper examination of the case on merits. . ..........

15. As per the Circular/Instruction issued by CBDT, the present Appeal should be not pressed by the Revenue. If, at the time of filing of the Appeal, decision has to be taken whether to file an Appeal or not and the Authority by due application of mind and bearing the two caveats laid down by the Hon'ble Supreme Court, in Surya Herbal Ltd., case (supra) should take a decision. In cases, where, the Appeals are pending before the Court, appropriate Officer has to take a decision. In the instant case, it appears that, no such specific instruction is issued to Mr. M. Swaminathan, the learned Senior Standing Counsel to withdraw the Appeal, nor, can we compel the learned counsel to withdraw the Appeal.

16. Having held that the Circular issued by CBDT is applicable to the case on hand and the tax effect being less than the threshold limit prescribed in the Circular, we dismiss the present Appeal by applying the law laid down by the Hon'ble Supreme Court, in Surya Herbal Ltd., case (supra), as the two caveats mentioned thereunder does not arise in the inst

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ant case." 4. Learned Standing Counsel for the Revenue submits that in the instant case also, the tax effect is lower than the limits prescribed in the Circulars. Thus, by adopting the monetary limits in the Circulars, the Tax Case Appeal filed by the Revenue is dismissed and the substantial question of law, framed for consideration, is left open. No costs.