Commissioner Of Income Tax v. M/S.i.p. Rings Ltd., Arjey Apex Centre

In the High Court of Judicature at MadrasDated : 27.08.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMandThe Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.102 of 2015 Commissioner of Income Tax-2,121, Mahatma Gandhi Road,Chennai....Appellant/RespondentVs M/s.I.P. Rings Ltd.,Arjey Apex Centre, No.24, College Road,Chennai - 600 006.PAN: ...Respondent/Appellant APPEAL under Section 260A of the Income Tax Act, 1961 againstthe order dated 26.09.2014 made in ITA.No.729/MDS/2014 on thefile of the Income Tax Appellate Tribunal, Chennai 'D' Bench forthe assessment year 2008-09 against the O/o. Commissioner ofIncome Tax (Appeals)II, Nungmbakkam Chennai 34 and made inI.T.A. No. 1312/2013-2014 dated 12.12.2013, and order dated27.12.2010 to Deputy Commissioner of Income Tax, Circle II(3)Chennai 34 in PAN/GIR. No. . For Appellant : Mr.Karthik Ranganathan, SSC assisted by Mr.S.Rajesh, SC For Respondent: Mr.R.Venkataraman for M/s.Subbaraya Aiyar Padmanabhan We have heard Mr.Karthik Ranganathan, learned SeniorStanding Counsel, assisted by Mr.S.Rajesh, learned StandingCounselappearingfortheappellant/revenueandMr.R.Venkataraman, learned counsel for M/s.Subbaraya AiyarPadmanabhan,learnedcounselappearingfortherespondent/assessee. 2.This appeal, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 is directed against the order dated26.09.2014 made in ITA.No.729/MDS/2014 on the file of the IncomeTax Appellate Tribunal, Chennai 'D' Bench for the assessmentyear 2008-09. 3.The appeal was admitted on 03.03.2015 on the followingsubstantial questions of law :“1) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in holding that the CIT(A) was justified in disallowing 25% of the Royaltyexpenditure as capital expenditure and allowingbalance 75% as revenue in nature without referringthe agreements entered between the parties whichprovides enduring benefits to the assessee andtherefore liable to be taxed as capital in nature? 2) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in following the earlierdecision in the assessee's own case for theassessment years 1999-2000 & 2003-2004 to 2005-2006in ITA.Nos.1716 to 1716/MDS/2010 dated 25.02.2011contrary to Explanation 3(b) to Section 32(1) ofthe Income Tax Act, which was inserted by FinanceAct, 1998, with effect from 01.04.1999? 4.The learned Senior Standing Counsel for the appellantsubmits that the above appeal is not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019dated 08.8.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 5.In the light of the said submissions, the above tax caseappeal is dismissed on account of the low tax effect. Thesubstantial questions of law framed are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeal to be heard and decided onmerits. No costs. -s/d- Assistant Registrar(CS-I) True Copy Sub-Assistant Registrar To 1.The Income Tax Appellate Tribunal, Chennai 'D' Bench. Chennai 'D' Bench. 2.The Commissioner of Income Tax (Appeals)II121, Mahatma Gandhi RoadNungmbakkam, Chennai 34.121, Mahatma Gandhi RoadNungmbakkam, Chennai 34. 3.The Deputy Commissioner of Income TaxCompany Circle III(3) , Chennai 34.4.The Commissioner of Income Tax-2121, Mahatma Gandhi RoadChennai 34.TCA.No.102 of 2015RR(CO)SP(11/11/2019)