COMMISSIONER OF INCOME TAX vs. M/S.TTK PROTECTIVE DEVICES L

T.C.A.No.37 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.37 of 2019 The Commissioner of Income Tax, Corporate Circle 3 (1), Chennai. ... Appellant

Versus M/s. TTK Protective Devices Limited, No.6, Cathedral Road, Chennai 600 006, PAN: AABCT1 184G ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order dated 25.05.2018 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.2405/Chny/2017. For Appellant : Mr.M.Swaminathan, Senior Standing Counsel Mrs.V.Pushpa, Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.37 of 2019 For Respondent : Mr.R.Venkatanarayanan for M/s. Subbaraya Aiyar

JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 25.05.2018 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.2405/Chny/2017, relating to the assessment year 2012-13.

2.By order dated 11.01.2019, this court admitted the aforesaid tax case appeal on the following substantial questions of law: “(i) Whether the Tribunal was right in holding that the logo charges paid by the assessee company to its group concern for licence to use the trade mark name and monogram 'ttk' by paying logo charges at 2% of the gross sale was revenue expenditure and not capital? (ii) Whether the Tribunal was right in holding that the payments made by the assessee company in the shape of technical knowhow fee by way of royalty at 2% of the gross sale was revenue expenditure and not capital? Page 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.37 of 2019 (iii) Is not the finding of the Tribunal bad on the material place by holding that the logo charges were revenue expenditure especially as per Clause (5)(2)(a) of MOU between TTK Group clearly shows that LRC Products Limited was the one, which issues order for sales and therefore, the payment for technical knowhow fees is expenditure of capital in nature? And (iv) Whether the Tribunal is right in holding that investments made in subsidiary companies for business consideration, which are capable of fetching exempt income are not liable for disallowance under Section 14A when the provisions of Section 14A as well as Rule 8D do not provide for any such exception?" 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 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. Page 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.37 of 2019 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 question of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 23.08.2022

Internet : Yes

Index : Yes / No av To 1. The Income Tax Appellate Tribunal, “D” Bench, Chennai. 2. The Commissioner of Income Tax, Corporate Circle 3 (1), Chennai. 3. The Deputy Commissioner of Income-tax, Corporate Circle- 3 (1), New Block, 4th Floor, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 4. The Commissioner of Income Tax (Appeals)- 11 , Chennai. Page 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.37 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av T.C.A.No.37 of 2019 23.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis