M/s.Fenner (India) Limited vs. The Addl. Commissioner of Income Tax

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TCA/440/2021HC Madras26 August 2021Bench: THE HON`BLE MR. JUSTICE T.S. SIVAGNANAM7 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court decided not to adjudicate the substantial questions of law due to subsequent developments. The court noted that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, and had been issued Form-3. Consequently, the Tax Case Appeal was disposed of on the ground that the assessee had availed the Vivad Se Vishwas scheme. The court granted the assessee liberty to restore the appeal if the ultimate decision under the Vivad Se Vishwas Act was not in their favour. In such an event, the Registry was directed to entertain a Miscellaneous Petition for Restoration without insisting on a delay condonation application. The substantial questions of law were left undecided.

What were the facts?

The assessee, M/s. Fenner (India) Limited, filed an appeal before the High Court of Judicature at Madras against an order dated 25.02.2013 passed by the Income Tax Appellate Tribunal (ITAT), Madras "D" Bench. The appeal pertained to assessment year 2002-03. The dispute involved the eligibility of royalty income received for providing know-how, secret formula, manufacturing process, and methods for goods manufactured by a subsidiary and exported by the assessee for deduction under Section 80HHC of the Income Tax Act, 1961. The High Court noted that the Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020, to resolve disputed tax matters. The assessee informed the court that they had availed the benefit of this scheme and were issued Form-3 on 13.01.2021.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the royalty income received for providing know-how, secret formula, manufacturing process, and methods in respect of goods manufactured by the subsidiary and exported by the assessee is not eligible for deduction under Section 80HHC of the Act? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that 90% of the royalty receipts should be excluded from the profits of the business for the purpose of computation of deduction under Section 80HHC of the Act? (Question of law) Assessee's contentions: The assessee argued that the royalty income should be eligible for deduction under Section 80HHC. The judgment does not record specific arguments made by the assessee on the second question or any authorities/precedents relied upon. Revenue's contentions: The judgment does not record any contentions made by the Revenue.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 260A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.440 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2021 CORAM : THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM AND THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP Tax Case Appeal No.440 of 2021 M/s.Fenner (India) Limited, No.3, Madurai Melakkal Road, Kochadai, Madurai – 625 016.

... Appellant Vs.

The Addl. Commissioner of Income Tax, Range I, Madurai. ... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "D" Bench, dated 25.02.2013 passed in I.T.A.No.1023/Mds/2012. Page 1/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 For Appellant : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan

For Respondent : Mr.M.Swaminathan

Senior Standing Counsel and Ms.V.Pushpa Standing Counsel

J U D G M E N T (Judgment was delivered by T.S. SIVAGNANAM, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 25.02.2013 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, ('the Tribunal' for brevity) in I.T.A.No.1023/Mds/2012 for the assessment year 2002-03. The appellant/assessee has raised the following substantial questions of law in this appeal : “1.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the royalty income received for providing know-how, secret formula manufacturing process and methods in respect of goods manufactured by the subsidiary and exported by the assessee is not eligible for deduction u/s.80HHC of the Act? Page 2/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 2.Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that 90% of the royalty receipts should be excluded from the profits of the business for the purpose of computation of deduction u/s.80HHC of the Act?” 2. We have heard Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan, learned counsel appearing for the appellant/ assessee and Mr.M.Swaminathan, learned Senior Standing Counsel and Ms.V.Pushpa, learned Standing Counsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. Page 3/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 4. We are informed by the learned counsel for the appellant/ assessee that the assessee has availed the benefit of Vivad Se Vishwas Scheme and the assessee had already been issued with Form-3 on 13.01.2021. 5. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee, is to be safeguarded. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already been issued with Form-3 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without Page 4/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. 6. With this observation, this Tax Case Appeal stands disposed of with the aforementioned liberty, and consequently, the Substantial Questions of Law are left open. No costs. (T.S.S., J.) (S.S.K., J.) 26.08.2021 (1/2)

mkn

Internet : Yes

Index : Yes / No To 1. Income Tax Appellate Tribunal, Madras "D" Bench 2.The Additional Commissioner of Income Tax, Range I, Madurai. Page 5/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 Page 6/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.440 of 2021 T.S. SIVAGNANAM, J. and SATHI KUMAR SUKUMARA KURUP, J. mkn Tax Case Appeal No.440 of 2021

26.08.2021 (1/2) Page 7/7 https://www.mhc.tn.gov.in/judis/

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