COMMISSIONER OF INCOME TAX vs. M/S.LEO PRIME COMPANY PVT LTD

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TCA/1224/2015HC Madras26 March 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn on account of the Low Tax Effect, citing CBDT Circular No. 17/2019. The Court noted that the Revenue's Senior Standing Counsel submitted that the appeal was not being pursued because the tax effect was less than the increased monetary limit of Rs. 1 crore for High Court appeals. Consequently, the substantial question of law framed at the time of admission was left open. The Revenue was granted liberty to seek restoration of the appeal if the tax effect was found to be above the threshold limit, to be heard and decided on merits. No costs were imposed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Revenue) against an order of the Income Tax Appellate Tribunal, Chennai, dated April 1, 2015, pertaining to Assessment Year 2009-2010. The assessee is M/s. Leo Prime Company Pvt. Ltd. The appeal was admitted on a substantial question of law concerning the nature of a payment made by the assessee for the use of a logo. The Revenue sought to challenge the Tribunal's finding that this payment was revenue in nature and not capital in character, as per Section 32(1)(ii) of the Income Tax Act, 1961. The appeal was preferred under Section 260A of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and circumstances of the case, the appellate Tribunal was right in holding that the payment made by the assessee for the purpose of use of a logo can only be considered as revenue in nature and not capital in character as per Section 32(1)(ii) of the Income Tax Act, 1961? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee. The appeal was dismissed before the assessee had an opportunity to present its arguments. Revenue's Contentions: The Revenue submitted that the appeal was not being pursued due to the Low Tax Effect, as per CBDT Circular No. 17/2019. This circular increased the monetary limit for filing appeals before the High Court to Rs. 1 crore, and the tax effect in this case was below this threshold.

Which sections of the Income-tax Act were involved?

Section 260A,Section 32(1)(ii)

AI-generated summary — verify with the full judgment below

T.C.A.No.1224 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 26.03.2021 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI T.C.A.No.1224 of 2015 Commissioner of Income Tax, No.121, Mahatma Gandhi Road, Chennai – 600 034. ... Appellant v. M/s. Leo Prime Company Pvt. Ltd., 61 & 62, Lakshmanan Nagar, Kandanchavadi, Chennai – 600 096. PAN : AAA CL 1901 E ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras, "D" Bench, dated 01.04.2015 in ITA.No.1330/Mds/2014 for the Assessment Year 2009-2010. For Appellant : Mr. Karthik Ranganathan, Senior Standing Counsel For Respondent : Notice Served

Page 1/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.1224 of 2015 JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) We have heard Mr. Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue. 2.The appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act) is directed against the order dated 01.04.2015 made in ITA.No.1330/Mds/2014 on the file of the Income Tax Appellate Tribunal, Chennai, "D" Bench (for brevity, the Tribunal) for the Assessment Year 2009-2010. 3.The appeal was admitted on the following substantial questions of law: “ Whether on the facts and circumstances of the case, the appellate Tribunal was right in holding that the payment made by the assessee for the purpose of use of logo can only be considered as revenue in nature and no capital in character as per section 32(1)(ii) of the Income Tax Act, 1961?”

4.

The learned Senior Standing Counsel appearing for the Page 2/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.1224 of 2015 appellant submits that the above appeal is not pursued by the Revenue on account of the Low Tax Effect in terms of Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5.In the light of the said submissions, the above Tax Case Appeal is dismissed as withdrawn on account of the Low Tax Effect. The substantial question of law framed is left open. In the event the tax effect in this case is above the threshold limit fixed in the said Circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. [M.D., J.] [T.V.T.S., J.] 26.03.2021

1/2 Index : Yes/No Internet : Yes Rj To Page 3/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.1224 of 2015 The Income Tax Appellate Tribunal, Chennai,"D" Bench Page 4/5 https://www.mhc.tn.gov.in/judis/ T.C.A.No.1224 of 2015 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. Rj T.C.A.No.1224 of 2015 26.03.2021 1/2 Page 5/5 https://www.mhc.tn.gov.in/judis/

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