In High Court of Judicature at Madras Dated : 19.8.2019 Coram : Honourable Mr.Justice T.S.SIVAGNANAM and Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.605 of 2019 Principal Commissioner of Income Tax-2, Chennai ...Appellant Vs M/s.India Pistons Ltd., Chennai-11. ...Respondent APPEAL under Section 260A of Income Tax Act, 1961 against order dated 09.5.2017 made in ITA.No.3346/Mds/2016 on file of Income Tax Appellate Tribunal, Chennai 'A' Bench for assessment year 2012-13. For Appellant: Mr.Karthik Ranganathan, SSC For Respondent: Mr.R.Vijayaraghavan Judgment was delivered by T.S.Sivagnanam,J We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel appearing for appellant Revenue and Mr.R.Vijayaraghavan, learned counsel accepting notice for respondent assessee. 2. This appeal, filed by Revenue under Section 260A of Income 1/7 http://www.judis.nic.in TCA.No.605 of 2019 Tax Act, 1961 is directed against order dated 09.5.2017 made in ITA.No. 3346/Mds/2016 on file of Income Tax Appellate Tribunal, Chennai 'A' Bench for assessment year 2012-13. 3. Revenue has filed this appeal by raising following substantial questions of law : i. Whether, on facts and in circumstances of case and in law, Tribunal was correct in allowing balance of additional depreciation carried forward from earlier assessment year ? ii. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating that as per Proviso to Section 32(1)(iia) of Act where asset is acquired and put to use by assessee for purpose of business for period of less than one hundred and eighty days in previous year, deduction under this Sub-Section shall be restricted to fifty percent of such asset ? iii. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating jurisdictional High Court's decision in case of M/s.MM Forgings Ltd. [reported in 349 ITR 673], which is in favour of Department ? iv. Whether, on facts and in 2/7 http://www.judis.nic.in TCA.No.605 of 2019 circumstances of case and in law, Tribunal was correct in allowing belated remittance of employees' contribution to PF and ESI since amounts involved are collected from employees and not from employer ? v. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating that amendment to Section 43B applies only to employer's contribution and not to employees' contribution ? vi. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating that Section 2(24)(x) of Act refers to any sum received by assessee from his employees as contribution to any PF or superannuation fund or any fund for welfare of such employees and does not refer to employer's contribution. Therefore, with respect to any sum received by tax payer from any of his employees, to which, provisions of Section 2(24)(x) of Act applies, assessee shall not be entitled to any deduction unless such sum is credited to employees account in relevant fund or funds before due date specified under Section 36(1)(va) of Act? vii. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating that recent 3/7 http://www.judis.nic.in TCA.No.605 of 2019 Board's circular No.22/2015 dated 17.12.2015 has clarified that provisions of Section 43B of Act does not apply to claim of deduction relating to employees' contribution to welfare fund, which are governed by Section 36(1)(va) of Act? viii. Whether, on facts and in circumstances of case and in law, Tribunal was correct in not appreciating decision of Supreme Court in case of Alom Extrusions Ltd., which is in favour of Department ? ix. Whether, on facts and in circumstances of case and in law, Tribunal was correct in holding that no disallowance on account of interest relating to exempt income under Limb (ii) of Rule 8D in assessee's case ? x. Whether, on facts and in circumstances of case and in law, Tribunal was right and justified in deleting disallowance under Section 14A holding that free funds in form of reserves and surplus held by assessee is more than investment made in assets yielding exempt income when assessee was maintaining mixed bag of funds and failed to substantiate that such investment in assets yielding exempt income are out of interest free funds ? xi. Whether, on facts and in circumstances of case and in law, Tribunal 4/7 http://www.judis.nic.in TCA.No.605 of 2019 was correct in not appreciating that Rule 8D is formula, which has to be strictly applied wherein interest debited to P&L account has to be taken for computing disallowance as per Second Limb of Rule 8D and there is no scope for bifurcating interest in any manner ? xii. Whether, on facts and in circumstances of case and in law, Tribunal was correct and justified in holding that investment made in subsidiary companies are not liable for disallowance under Section 14A when provisions of said Section as well as Rule 8D do not provide for any such exception? xiii. Whether, on facts and in circumstances of case and in law, Tribunal was justified in not appreciating fact that investment in shares of subsidiary companies will also yield only dividend income, which is exempt from income tax and hence, provisions of Section 14A are applicable? And xiv. Whether, on facts and in circumstances of case, Tribunal was correct in not appreciating that as per CBDT's Circular No. 5/2014 dated 11.2.2014 in paragraph No.6 has clarified that disallowance under Section 14A read with Rule 8D has to be made even when there is no exempt income earned during relevant previous year? 5/7 http://www.judis.nic.in TCA.No.605 of 2019 4. learned Senior Standing Counsel for appellant submits that above appeal is not pursued by Revenue on account of low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by Central Board of Direct Taxes. By said Circular, monetary limit for filing or pursuing appeal before High Court has been increased to Rs.1 Crore. It is further submitted that tax effect in this case is less than threshold limit. 5. In light of said submissions, above tax case appeal is dismissed on account of low tax effect. substantial questions of law raised are left open. In event tax effect is above threshold limit fixed in said circular, liberty is granted to Revenue to make mention to this Court to restore appeal to be heard and decided on merits. 19.8.2019 Internet: Yes To Income Tax Appellate Tribunal, Chennai 'A' Bench. RS 6/7 TCA.No.605 of 2019 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.605 of 2019 19.8.2019 7/7 Principal Commissioner of Income-tax-2, Chennai v. India Pistons Ltd