PRINCIPAL COMMISSIONER OF IN vs. MAVIS SATCOM LTD

TCA.Nos.151, 156 & 158 of 2021 In the High Court of Judicature at Madras Dated : 09.3.2021 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Ms.Justice R.N.MANJULA Tax Case Appeal Nos.151, 156 and 158 of 2021 & CMP.Nos.2844 and 2964 of 2021 Principal Commissioner of Income Tax, Central 2, Chennai-34 ...Appellant Vs M/s.Mavis Satcom Ltd., Chennai-32. ...Respondent APPEALS under Section 260A of the Income Tax Act, 1961 against the common order dated 08.1.2019 made respectively in ITA.Nos. 2213, 2212 and 2214/Chny/2018 on the file of the Income Tax Appellate Tribunal, Chennai 'D' Bench respectively for the assessment years 2010-11, 2009-10 and 2011-12. For Appellant: Mr.T.R.Senthilkumar, SSC assisted by Ms.K.G.Usharani, JSC 1/4 https://www.mhc.tn.gov.in/judis/ TCA.Nos.151, 156 & 158 of 2021 COMMON JUDGMENT (Judgment was delivered by

T.S.Sivagnanam,J)

We have heard Mr.T.R.Senthilkumar, learned Senior Standing Counsel assisted by Ms.K.G.Usharani, Junior learned Standing Counsel appearing for the appellant – Revenue. 2. These appeals, filed by the Revenue under Section 260A of the Income Tax Act, 1961, are directed against the common order dated 08.1.2019 made respectively in ITA.Nos. 2213, 2212 and 2214/Chny/ 2018 on the file of the Income Tax Appellate Tribunal, Chennai 'D' Bench respectively for the assessment years 2010-11, 2009-10 and 2011-12. 3. The Revenue has filed these appeals by raising the following substantial questions of law : “i. Whether the Appellate Tribunal was right in holding that the expenses incurred on acquisition of copy rights/satellite rights of films is revenue in nature and the scope of Accounting Standard AS-26 is not applicable for such copy rights ? ii. Whether the Income Tax Appellate Tribunal was right in law in reversing the capitalization of the expenses when accounting standards issued by the Institute of Chartered 2/4 https://www.mhc.tn.gov.in/judis/ TCA.Nos.151, 156 & 158 of 2021 Accountants of India, copy rights in films/ serials are intangible assets and writing off of entire cost of the acquiring such rights at the first broadcast itself on the ground that future revenues are not ascertainable with reasonable accuracy, cannot be accepted as it neither adheres to the principles of Accounting Standards nor Income Tax Law ? And iii. Whether the Income Tax Appellate Tribunal was right in holding that the monies received are shown as deferred revenue by the assessee in the year of receipt and are offered as income in the year when programme is aired when the fact remains that the assessee is following mercantile system of accounting and the impugned revenue has to be offered only in the current year?” 4. The learned Senior Standing Counsel for the appellant submits that the above appeals are not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 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 the respective cases is less than the threshold limit. 3/4 https://www.mhc.tn.gov.in/judis/ TCA.Nos.151, 156 & 158 of 2021 T.S.SIVAGNANAM,J AND R.N.MANJULA,J RS 5. In the light of the said submissions, the above tax case appeals are dismissed on account of the low tax effect. The substantial questions of law raised are left open. In the event the tax effect in the respective cases is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to file a petition before this Court to restore the appeals to be heard and decided on merits. Consequently, the connected CMPs are also dismissed. 09.3.2021 To The Income Tax Appellate Tribunal, Chennai 'D' Bench. TCA.Nos.151, 156 & 158 of 2021 & CMP.Nos.2844 and 2964 of 2021 4/4 https://www.mhc.tn.gov.in/judis/