CIT Vs TVS Motors Limited (Madras High Court)
Summary: The Madras High Court considered the Revenue’s appeal against TVS Motors Limited for assessment year 2002-03 concerning disallowance under Section 40(a)(i) of the Income-tax Act, 1961. The substantial question of law asked whether the Income Tax Appellate Tribunal was justified in deleting the disallowance without examining the nature of the payment and whether it was taxable in India. The appeal arose from the Chennai Tribunal’s order dated 19 September 2008 in ITA No. 1449/Mds/2006.
The High Court noted that the Tribunal had granted relief on the basis of decisions in the assessee’s own cases for assessment years 1991-92, 1992-93 and 1994-95, in ITA Nos. 388, 389 and 390 of 1998. Those earlier Tribunal decisions were in favour of the assessee and had neither been challenged nor interfered with. The Court confined its reasoning to that circumstance and did not separately determine the nature or Indian taxability of the underlying payments.
Finding no infirmity in the Tribunal’s order, the High Court answered the question of law in favour of the assessee and dismissed the Revenue’s appeal. The judgment was delivered on 11 July 2025 by Chief Justice K. R. Shriram and Justice Sunder Mohan in TCA No. 739 of 2009. The order also recorded that the connected TCA No. 738 of 2009 had been withdrawn owing to low tax effect.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The only question of law framed on 4.8.2009 in this appeal, which pertains to the assessment year 2002-2003, and another appeal T.C.A.No.738 of 2009 (which has been withdrawn due to low tax effect) is as under:
“Whether on the facts and circumstances of the case, the Tribunal was right in law in deleting the disallowance under Section 40(a)(i) made by the assessing officer without going into the issue of the nature of payment and its taxability in India?”
2. The Tribunal has set aside the disallowance under Section 40(a)(i) of the Income-tax Act, 1961 on the ground that in assessee’s own case for assessment years 1991-1992, 1992-1993 and 1994-1995 in ITA.Nos.388, 389 and 390 of 1998, the Tribunal decided the issue in favour of assessee. The three appeals decided by the Tribunal in favour of assessee have not been challenged or interfered with.
3. We, therefore, find no infirmity in the order passed by the Tribunal. The questions of law are answered in favour of assessee.
Appeal is dismissed.
