PRINCIPAL COMMISSIONER OF IN vs. M/S SHRIRAM AUTOMALL INDIA L

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TCA/283/2019HC Madras23 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, it noted the submission by the Revenue's counsel regarding CBDT Circular No.17/2019, which sets a monetary limit of Rs.1,00,00,000/- for pursuing appeals before the High Court. As the tax effect in the present appeal was stated to be less than this threshold, the High Court dismissed the appeal as withdrawn. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded, and the connected miscellaneous petition was closed.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax 6, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 01.05.2017 passed by the Income Tax Appellate Tribunal (ITAT), Chennai. The appeal pertained to assessment year 2013-14 and challenged the ITAT's deletion of an addition made towards royalty payment. The assessee is M/s.Shriram Automall India Ltd. The High Court noted that the Revenue's counsel brought to its notice CBDT Circular No.17/2019, which stipulates that appeals shall not be filed or pursued if the tax effect does not exceed Rs.1,00,00,000/-. The Revenue submitted that the tax effect in this appeal was below this threshold.

What were the issues?

The substantial questions of law before the High Court were: 1. Whether the Appellate Tribunal was right in deleting the addition made towards royalty payment since the assessee was getting enduring benefits and acquired an intangible asset, making the expenditure capital in nature? 2. Whether the Income Tax Appellate Tribunal was correct in deciding that the royalty paid for using copyright is an intangible depreciable asset and is capital in nature, as per Explanation 3 to Section 32(1) of the Income Tax Act? The Revenue contended that the royalty payment was for acquiring enduring benefits and an intangible asset, thus being capital in nature. The Revenue also argued that royalty for using copyright falls under Section 32(1) Explanation 3 and is capital in nature. The judgment records no specific arguments from the assessee on these points, as the appeal was dismissed on procedural grounds.

Which sections of the Income-tax Act were involved?

Section 260A,Section 32(1)

AI-generated summary — verify with the full judgment below

T.C.A.No.283 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.283 of 2019 and CMP.No.10217 of 2019 Principal Commissioner of Income Tax 6 No.121, Nungambakkam High Road, Chennai 600 034. ... Appellant

Versus M/s.Shriram Automall India Ltd., Mookambika Complex, No.4, Lady Desika Road, Mylapore, Chennai - 600 004. PAN: AAN CS 8571 L ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order dated 01.05.2017 passed by the Income Tax Appellate Tribunal, “A” Bench, Chennai, in I.T.A.No.2505/Mds/2016. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.283 of 2019 For Respondent : Mr.R.Sivaraman JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the common order dated 01.05.2017 passed by the Income Tax Appellate Tribunal, “A” Bench, Chennai, inI.T.A.No.2505/Mds/2016, relating to the assessment year 2013-14, by raising the following substantial questions of law:- “(i) Whether the Appellate Tribunal was right in deleting the addition made towards royalty payment since assessee was getting enduring benefits and acquired an intangible asset, which made the expenditure in Capital in nature? (ii) Whether the Income Tax Appellate Tribunal was correct in deciding that the royalty is being paid for using of copyright which is as per explanation 3 to Section 32(1) of the Income Tax Act, is an intangible depreciable asset and is Capital in nature?" 3.When the matter was 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 appeal shall not be filed/pursued by the Page 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.283 of 2019 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 this appeal is less than the threshold limit. 4.In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. Consequently, connected miscellaneous petition is closed. (R.M.D., J.) (M.S.Q., J.) 23.08.2022

Internet : Yes

Index : Yes / No av To 1. The Income Tax Appellate Tribunal, “A” Bench, Chennai. 2. The Principal Commissioner of Income Tax 6 No.121, Nungambakkam High Road, Chennai 600 034. Page 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.283 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av 3. The Deputy Commissioner of Income-tax, Corporate Circle 6 (1), Chennai. 4. The Commissioner of Income Tax (Appeals), Chennai. T.C.A.No.283 of 2019 Page 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.283 of 2019 23.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis

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