The Principal Commissioner Of Income Tax Central 1 v. M/S.bgr Energy Systems Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 10.11.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.Nos.472 & 473 of 2018 & C.M.P.No.10178 of 2018 The Principal Commissioner of Income TaxCentral 1No.108, Mahatma Gandhi Road,Chennai. ..Appellant in both T.C.AsVersus M/s.BGR Energy Systems Ltd,No.443, Anna Salai,Teynampat, Chennai – 600 018PAN:AAB CG 2202 J ..Respondent in both T.C.As Common Prayer:- Tax Case Appeals filed under Section 260-A ofthe Income Tax Act, 1961, against the order of the Income TaxAppellate Tribunal, Madras 'B' Bench, Chennai made inI.T.A.No.660/Mds/2017 and I.T.A.No.954/Mds/2017 dated 07.12.2017relating to the Assessment Year 2010-11. Against the order ofthe Commissioner of Income tax (Appeals)-19, Chennai – 34, Dated18/01/2017 in ITA no. 40/16-17 for the assessment year 2010-2011and against the order of Additional Commissioner of Income Tax,Nellore Range, Nellore, Dated 31/03/2013 in PAN/GIRno. for the assessment year 2010-2011. For Respondent : Mr.Venkatanarayanan For M/s.Subbaraya Aiyar Padmanaban [in both T.C.As] We have heard Mr.T.R.Senthil Kumar, learned Senior StandingCounsel, assisted by M/s.K.G.Usha Rani, learned Standing Counselappearing for the appellant / Revenue and Mr.Venkatanarayanan https://hcservices.ecourts.gov.in/hcservices/ for M/s.Subbaraya Aiyar Padmanaban, learned counsel for therespondent / assessee. 2. These appeals, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 is directed against the order dated07.12.2017madeinI.T.A.No.660/Mds/2017andI.T.A.No.954/Mds/2017 on the file of the Income Tax AppellateTribunal, Chennai 'B' Bench for the Assessment Year 2010-11. 3. These appeals were admitted on 24.07.2018 on the followingsubstantial questions of law : “T.C.A.No.472 of 20181.Whether the Appellate Tribunal isjustified in holding that the disallowanceas per the provisions of Section 14A readwith Rule 8D of Income Tax Rules, 1962 is tobe restricted to the extent of exemptedincome earned by the assessee during theyear?2.Whether the Appellate Tribunal iscorrect in not appreciating the legalprinciplethatdisallowabilityofexpenditure 14A read with Rule 8D of IncomeTax Rules, 1962, as clarified by the Board'sCircular No.5/2014 dated 10.02.2014, isneither conditional upon the earning ofexempted income nor linked to the quantum ofexempted income earned by the assessee?” T.C.A.No.473 of 2018 1.Whether the Appellate Tribunal isjustified in confirming the order of the CIT(A)deletingtheadditionofRs.2,06,28,478/- made towards disallowanceof depreciation on technical knowhow feepaid?2.Whether the Appellate Tribunal isjustified in holding that the assessee iseligible for depreciation on value of theamount claimed to have paid towardstechnical know-how, by not appreciating thefact that the assessee has not acquired anycapital asset in the nature of technicalknow-how, either fully or partly and therebythe conditions mentioned in the Section 32(1)(ii) were not fulfilled?” 4. The learned Senior Standing Counsel for the appellantsubmits that the above appeals are 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 these cases areless 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 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 these appeals to be heard and decided onmerits. No costs. Connected miscellaneous petition is closed. 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 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 these appeals to be heard and decided onmerits. No costs. Connected miscellaneous petition is closed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar Kak To 1. The Income Tax Appellate Tribunal,'B' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals)-19. Chennai 34. 3. The Additional Commissioner of Income Tax, Nellore Range, Nellore. +1 cc to Mr. T.R. Senthil Kumar,Advocate Sr.No.36522. +1 cc to M/S Subbaraya Aiyar Padmanabhan,Advocate Sr.No.36525. SSD(CO)NS(28/12/2020)KKV/22/02/2021