Commissioner Of Income Tax, Chennai v. M/S. Chettinad Morimura Semiconductormaterial Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 26.07.2021 CORAM: THE HON'BLE MR.JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE R.HEMALATHA T.C.A.Nos.525 & 526 of 2016 Commissioner of Income Tax, Chennai... Appellant in bothTCAs/Appellant v. M/s. Chettinad Morimura SemiconductorMaterial Pvt. Ltd.,37, Old Mahabalipuram Road,Kazhipattur Village, Padur Post,Kanchipuram District - 603 103PAN : AAACC2461Q ... Respondent in bothTCAs/Respondent T.C.A. No.525 /2016 :Appeal preferred under Section 260A ofthe Income Tax Act, 1961, against the order of the Income TaxAppellate Tribunal, Madras, "B" Bench, dated 19.02.2014 inI.T.A.No.2080/Mds/2013 for the Assessment Year 2005-2006. T.C.A. No.526/2016 :Appeal preferred under Section 260A ofthe Income Tax Act, 1961, against the order of the Income TaxAppellate Tribunal, Madras, "B" Bench, dated 19.02.2014 inI.T.A.No.2081/Mds/2013 for the Assessment Year 2006-2007. against order passed by the Commissioner of Income Tax –(Appeals)I,Chennai-34inITA.No.422/08-09/A1andITA.No.519/09/-10/A1 dated 20.09.2013 against the order passedby the Assistant Commissioner of Income Tax, Company Circle 1(3), Chennai in GIR/PAN.No. and GIR/PAN.No. ,dated 22/12/2005 Assessment Year 2005-2006 and 2006-2007. https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) We have heard Mr.T.Ravikumar, learned Senior StandingCounsel for the appellant/Revenue and M. Kaushik, learnedcounsel for the respondent/assessee. 2. These appeals, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 (for short, the Act) are directedagainst the order dated 19.02.2014 made respectively inITA.Nos.2080/Mds/2013 & 2081/Mds/2013 on the file of theIncome Tax Appellate Tribunal, Chennai, ''B'' Bench (forbrevity, the Tribunal) for the Assessment Years 2005-2006 and2006-2007. 3. The appeals were admitted on the following substantialquestions of law: T.C.A. No.525 /2016 : “ (i) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin law in holding that the expenditure incurredon repairs and maintenance of community hasconstructed for the villagers in the area was arevenue expenditure eligible for deduction in thehands of the assessee, when the fact remains thatconstruction/maintenance of community hall is notrelated to the business of the assessee andtherefore, not eligible for deduction? (ii) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin holding that the expenditure incurred towardsfilling, levelling and developing of safety areaof community hall constructed for villagers inthe area is eligible for deduction in the handsof the assessee as revenue in nature when theconstruction/maintenance of community hall is notrelated to the business of the assessee andtherefore, not eligible for deduction? (iii) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin overlooking the fact that in any event theexpenditure incurred on the community hall anddevelopment of safety area amounted to additionof capital asset and therefore, the expenditurewas not revenue in nature? (iv) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin holding that the expenditure incurred towardsraw material storage yard is revenue expenditurewhen the said expenditure was incurred for totalreplacement of the existing storage yard and notfor mere setting right defects of existing yardand therefore, oughtto have been treated ascapital expenditure resulting in an asset/benefitof enduring nature? (iii) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin overlooking the fact that in any event theexpenditure incurred on the community hall anddevelopment of safety area amounted to additionof capital asset and therefore, the expenditurewas not revenue in nature? (iv) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin holding that the expenditure incurred towardsraw material storage yard is revenue expenditurewhen the said expenditure was incurred for totalreplacement of the existing storage yard and notfor mere setting right defects of existing yardand therefore, oughtto have been treated ascapital expenditure resulting in an asset/benefitof enduring nature? “ (i) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin holding that the expenditure incurred towardsfilling, levelling and developing of safety areaof community hall constructed for villagers inthe area is eligible for deduction in the handsof the assessee as revenue in nature when theconstruction/maintenance of community hall isnot related to the business of the assessee andtherefore, not eligible for deduction? (ii) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin overlooking the fact that in any event theexpenditure incurred on development of safetyarea amounted to addition of capital asset andtherefore,the expenditure was not revenue innature? (iii) Whether in the facts and in thecircumstances of the case, the Tribunal was rightin holding that the expenditure incurred towardsraw material storage yard is revenue expenditurewhen the said expenditure was incurred for totalreplacement of the existing storage yard and notfor mere setting right defects of existing yardand therefore, ought to have been treated ascapital expenditure resulting in an asset/benefitof enduring nature? " 4. The learned Senior Standing Counsel appearing for theappellant submits that the above appeals are not pursued by theRevenue on account of the Low Tax Effect in terms of CircularNo.17/2019 dated 08.08.2019 issued by the Central Board ofDirect Taxes. By the said Circular, the monetary limit forfiling or pursuing an appeal before the High Court has been increased to Rs.1 crore. It is further submitted that the taxeffect in this case is less than the threshold limit. 5. In the light of the said submissions, the above Tax CaseAppeals are dismissed on account of the Low Tax Effect. Thesubstantial questions of law framed are left open. In theevent the tax effect in all these cases are above the thresholdlimit fixed in the said Circular, liberty is granted to theRevenue to make a mention to this Court to restore the appealsto be heard and decided on merits. No costs. Sd/- Assistant Registrar(CS IX) //True Copy// Sub Assistant Registrar Rj To 1. The Income Tax Appellate Tribunal, Chennai,"B" Bench Chennai,"B" Bench 2. The Commissioner of Income Tax, (Appeals)I, Chennai-34. (Appeals)I, Chennai-34. 3. The Assistant Commissioner of Income Tax, Company Circle1(3), Chennai. Company Circle1(3), Chennai. +1cc to Mr.T.Ravikumar, Advocate, S.R.No.35743 PVS(CO)HS(18/08/2021)