THE COMMISSIONER OFINCOME TAX vs. M/S.CHEMPLAST SANMAR LTD.

Tax Case Appeal No.532 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.11.2021 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.532 of 2021 The Commissioner of Income Tax, Chennai

...Appellant -vs- M/s. Chemplast Sanmar Limited, 9, Cathedri Road, Chennai 600 086.

...Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order dated 28.10.2016 passed by the Income Tax Appellate Tribunal, Madras “C” Bench, Chennai in I.T.A.No.985/Mds/2015. For Appellant : Mr.T.R. Ravikumar For Respondent : Mr. R. Venkata Narayanan for M/s. Subbaraya Aiyar

1/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.532 of 2021 JUDGMENT (Judgment was delivered by R. MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, calling in question the correctness of the order dated 28.10.2016 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai, in I.T.A.No.985/Mds/2015 relating to the assessment year 2005-06 by raising the following substantial questions of law:- '(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that payment made towards non-compete fee is a revenue expenditure and not capital? (ii) Whether the Tribunal was correct in holding that non compete fee paid is revenue in nature and not capital especially when the Director's report, the auditor statement and the Notes annexed thereunder does not whisper about non compete fee payment to be made? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in ignoring the fact that the non compete agreement cannot stand in isolation and was part of the agreement for take over the caustic soda business from Kothari Petrochemicals which gave an enduring benefit to the Assessee for a period of 10 years and therefore Capital in nature?' 2/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.532 of 2021 2. 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 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 this appeal 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 appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. [R.M.D,J.] [M.S.Q, J.] 30.11.2021

Internet : Yes

Index : Yes / No msr 3/4 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.532 of 2021 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. msr To Income Tax Appellate Tribunal, Madras “C” Bench, Chennai Tax Case Appeal No.532 of 2021 30.11.2021 4/4 https://www.mhc.tn.gov.in/judis