THE COMMISSIONER OF INCOME T vs. M/S.JOHN CRANE SEALING SYSTE

Tax Case Appeal Nos.29 and 30 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 27.01.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.29 and 30 of 2022 and CMP.No.644 of 2022 The Commissioner of Income Tax, Chennai. ...Appellant in both Cases -vs- M/s.John Crane Sealing Systems (India) Pvt Ltd., No1, Ground Floor, Casa Blanca, No.6, Casa Major Road, Egmore, Chennai – 600 008. PAN : AAACJ2131J ...Respondent in both Cases Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 15.09.2017 passed by the Income Tax Appellate Tribunal, Chennai “D” Bench, in I.T.A.Nos.621/MDs/2016 and 785/Mds/2016. For Appellant : Mr.T.Ravi Kumar (in both cases) For Respondent : Mr. Vijayan for M/s. King & Partridge (in both cases) 1/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.29 and 30 of 2022

COMMON JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) These tax case appeals have been filed by the appellant / Revenue, challenging the order dated 15.09.2017 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.Nos.621/MDs/2016 and 785/Mds/2016, relating to the assessment year 2011-12, by raising the following substantial questions of law:- (i) Whether the payment of royalty being in the nature of intangible assets is eligible for claimed depreciation under Explanation (4) to Section 32(1)(iii) of the Income tax Act? (ii) Whether the Tribunal is right in law in directing the TPO to use three years data including the data relating to the financial years before the financial year in which the international transaction actually took place which is contrary to the provisions of Income tax Rule 10B(4)? (iii) Whether the Tribunal is right in law in demanding comparability standards that may itself defeat the purpose of law relating to determination of Arms Length Price under the Income 2/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.29 and 30 of 2022 tax Act? (iv) Whether the foreign exchange Notional loss being speculative in nature, being market to market losses towards unrealized loss on outstanding derivative contracts, being contingent in nature is liable to be disallowed? 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 is 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, connected miscellaneous petition is closed. [R.M.D,J.] [M.S.Q, J.] 27.01.2022

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Index : Yes / No av R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. av To 1. The Income Tax Appellate Tribunal, Chennai 'D' Bench. 2. The Commissioner of Income Tax, Chennai. Tax Case Appeal Nos.29 and 30 of 2022 and CMP.No.644 of 2022 4/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.29 and 30 of 2022 27.01.2022 5/5 https://www.mhc.tn.gov.in/judis