THE COMMISSIONER OF INCOME vs. BEST & CROMPTON ENGINEERING

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TCA/267/2017HC Madras16 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeals as withdrawn. The Revenue brought to the court's notice Circular No. 17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes (CBDT). This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). The Revenue submitted that the tax effect in these appeals was less than this threshold limit. In light of this submission, the appeals were dismissed as withdrawn. The court clarified that the substantial questions of law remain open for determination in appropriate cases. No costs were imposed, and the connected miscellaneous petitions were closed.

What were the facts?

The Revenue (Commissioner of Income-Tax, Chennai) filed five Tax Case Appeals (TCA.Nos. 267 to 271 of 2017) before the High Court of Judicature at Madras. These appeals challenged the order dated 27.07.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras “D” Bench. The appeals pertained to assessment years 2006-07, 2007-08, 2008-09, 2009-10, and 2010-2011. The respondent in these appeals is M/s. Best & Crompton Engineering Projects Ltd. The appeals were filed under Section 260A of the Income Tax Act, 1961. The respondent did not appear before the High Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim of depreciation on pre-qualification rights and technical know-how is to be allowed? 2. Is not the finding of the Tribunal bad, especially when, as per Explanation (vi) to Section 43(1) of the Income Tax Act, the cost in the hands of the Transferee Company shall be the same as in the hands of the Transferor Company? The Revenue argued that the Tribunal's finding regarding depreciation on pre-qualification rights and technical know-how was incorrect, particularly in light of Explanation (vi) to Section 43(1) of the Income Tax Act, which dictates that the cost in the hands of the transferee should be the same as in the hands of the transferor. The judgment records no specific arguments from the respondent.

Which sections of the Income-tax Act were involved?

Section 260A,Section 43(1)

AI-generated summary — verify with the full judgment below

TCA.Nos.267 to 271 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 16.08.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.Nos. 267 to 271 of 2017 & CMP.Nos.8412, 8413, 8414 & 8415 of 2017 Commissioner of Income-Tax, Chennai .. Appellant in all appeals Versus M/s. Best & Crompton Engineering Projects Ltd., Parsn Complex, A Wing, 9th Floor, 602 Anna Salai, Chennai – 600 034. PAN AABCB 5248H .. Respondent in all appeals

Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras “D” Bench, Chennai, dated 27.07.2016 passed in respective ITA.Nos.726,727, 728, 729 and 730/Mds/2015 for the respective assessment years 2006-07, 2007-08, 2008-09, 2009-10 & 2010-2011. For Appellant in all cases : Mr. T. Ravi Kumar, Standing counsel 1/4 https://www.mhc.tn.gov.in/judis TCA.Nos.267 to 271 of 2017 For Respondent in all cases : No appearance COMMON JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) These Tax Case Appeals have been filed by the appellant / revenue, questioning the correctness of the order dated 27.07.2016 passed by the IIncome Tax Appellate Tribunal, Madras “D” Bench, Chennai, in respective ITA.Nos.726,727, 728, 729 and 730/Mds/2015 for the respective assessment years 2006-07, 2007-08, 2008-09, 2009-10 & 2010-2011 on the following substantial questions of law; '1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim of depreciation on pre qualification rights and technical know how is to be allowed? 2. Is not the finding of the Tribunal bad especially when as per Explanation (vi) to Section 43(1) of the Income Tax Act wherein the cost in the hands of the Transferee Company shall be the same as in the hands of the Transferor Company?”

2/4 https://www.mhc.tn.gov.in/judis TCA.Nos.267 to 271 of 2017 2. When the matters were taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals are less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. Consequently, the connected miscellaneous petitions are closed. [R.M.D,J.] [M.S.Q., J.] 16.08.2022 msr

Index : Yes / No 3/4 https://www.mhc.tn.gov.in/judis TCA.Nos.267 to 271 of 2017 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr To 1. The Assistant Commissioner of Income Tax, Corporate Circle I(3), Chennai-34. 2. The Commissioner of Income Tax (Appeals)-1 Chennai-34 3. The Income Tax Appellate Tribunal 'D' Bench, Chennai. 4. Commissioner of Income-Tax, Chennai. T.C.A.Nos. 267 to 271 of 2017 & CMP.Nos.8412, 8413, 8414 & 8415 of 2017 16.08.2022 4/4 https://www.mhc.tn.gov.in/judis

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