COMMIKSSIONER OF INCOME TAX vs. M/S.MAVIS SATCOM LIMITED

T.C.A.Nos.431 & 435 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 03.08.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.431 AND 435 of 2015 The Commissioner of Income Tax Media Circle Chennai

.. Appellant in both T.C.As Vs. M/s.Mavis Satcom Limited No.48, N.B.Jawaharlal Nehru Salai Ekkattuthangal Chennai 600 032 PAN : AACM 2127 K .. Respondent in both T.C.As Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 18.03.2014 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in respective I.T.A.Nos.1659 and 1662/Mds/2013. For Appellant : Ms.V.Pushpa in both T.C.As Standing Counsel For Respondent : Mr.Subbaraya Aiyar in both T.C.As 1/6 T.C.A.Nos.431 & 435 of 2015 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 18.03.2014 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in respective I.T.A.Nos.1659 and 1662/Mds/2013 for the assessment years 2003-04 and 2007-08. 2. By order dated 27.07.2015, this Court admitted the aforesaid tax case appeals on the following substantial questions of law : “1) Whether on the facts and circumstances of the case the Hon'ble Income Tax Appellate Tribunal was right in law in holding the reopening u/s 147 as invalid ? 2) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was right in holding that reopening as invalid when as per Explanation 1 to the provisions of Sections 147, production of account or other evidences before the Assessing Officer from which material evidence could with due diligence have been discovered will not necessarily amount to disclosure within the meaning of proviso to Section 147 of the Act ? 3) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was right in holding that reopening u/s 147 as invalid when as per clause (c) of Explanation 2, 2/6 T.C.A.Nos.431 & 435 of 2015 where assessments have earlier been made and there is escapement of income, reopening can be made to reassess the escaped income ? 4) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was right in law in holding the reopening u/s 147 as invalid when the assessee had claimed expenditure as 'revenue' in nature while the benefit of expenditure is enduring in nature and hence the proceedings are valid as per law ? 5) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the rights are found incapable of sustained exploitation after the first broadcast and hence considering the principles of consistency and nature of expenditure, the same has to be treated as revenue in nature, since the assessee does not derive enduring benefit ? 6) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in reversing the capitalization of the expenses without noting that as per accounting standards issued by the Institute of Chartered Accounts of India AS26, copyrights in films/serials are intangible assets and writing off of entire cost of the acquiring such rights at the first broadcast itself on the ground that future revenues are not ascertainable? 7) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in reversing the capitalization of the expenses when the assessee is offering the revenue derived on subsequent telecast in the relevant assessment year, but has chosen to claim the entire expenditure relating to such revenue in the first year of telecast, which is against the mercantile system of account followed by the assessee ?” 3. When these matters were taken up for consideration, the learned 3/6 T.C.A.Nos.431 & 435 of 2015 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. 4. 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. [R.M.D,J.] [M.S.Q, J.] 03.08.2022

Index : Yes / No gya To 4/6 T.C.A.Nos.431 & 435 of 2015 1.The Commissioner of Income Tax Media Circle Chennai 2.The Income Tax Appellate Tribunal 'D' Bench, Chennai 3.The Commissioner of Income Tax (Appeals)-6 Chennai 4.The Assistant Commissioner of Income Tax Media Circle-I Chennai 34

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