THE COMMISSIONER OF INCOME vs. M/S.TTK LIG LTD

T.C.A.Nos.311 and 316 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 23.08.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.311 and 316 of 2016 The Commissioner of Income Tax Chennai .. Appellant in both T.C.As Vs. M/s.TTK LIG Ltd. No.6, Cathedral Road Chenni 600 006

.. Respondent in both T.C.As Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 31.10.2012 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in respective I.T.A.No. 1795/Mds/2011 and I.T.A.No.1829/Mds/2011. For Appellant : Mr.M.Swaminathan in both T.C.As Mrs.V.Pushpa Standing Counsels For Respondent : Mr.R.Venkatanarayanan in both T.C.As for M/s.Subbaraya Aiyar 1/4 https://www.mhc.tn.gov.in/judis T.C.A.Nos.311 and 316 of 2016 C O M M O N J U D G M E N T (Judgment was delivered by R. MAHADEVAN, J.) These tax case appeals have been filed by the appellant/Revenue, calling in question the correctness of the common order dated 31.10.2012 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in respective I.T.A.No. 1795/Mds/2011 and I.T.A.No.1829/Mds/2011, for the assessment year 2006-07. 2. By order dated 20.06.2016, this Court admitted the aforesaid tax case appeals on the following substantial questions of law : “(i). Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the payments made by the assessee in the shape of technical knowhow fee by way of royalty at 2% of the gross sale was revenue expenditure and not capital? (ii). Whether the logo charges paid by the Company to its group concern for license to use the trade name and monogram TTK by paying logo charges at 2% of the total sales was revenue expenditure and not capital? (iii). Is not the finding of the Tribunal bad on the material placed by holding that the expenditure was revenue especially as per clause (5)(2)(a) of MOU between TTK Group clearly shows that LRC products Limited was the one who issues orders for sales and therefore, capital in nature? 2/4 https://www.mhc.tn.gov.in/judis T.C.A.Nos.311 and 316 of 2016 (iv). Whether on the facts and circumstances of the case the Tribunal was right in restricting the disallowance made under Section 14A to 2% of the exempt income without any reasonable basis?” 3. When these matters were taken up for consideration, the learned Standing Counsels 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. 4. In the light of the aforesaid submissions made by the learned Standing Counsels 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. [R.M.D,J.] [M.S.Q, J.] 23.08.2022

Index : Yes / No gya R. MAHADEVAN, J. 3/4 https://www.mhc.tn.gov.in/judis T.C.A.Nos.311 and 316 of 2016 AND MOHAMMED SHAFFIQ, J. gya To 1. The Assistant Commissioner of Income Tax Company Circle-III(2) Chennai 2.The Commissioner of Income Tax (Appeals)-III Chennai 3.The Income Tax Appellate Tribunal 'D' Bench, Chennai T.C.A.Nos.311 and 316 of 2016 23.08.2022

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