PRINCIPAL COMMISSIONER OF IN vs. M/S.JANSONS INDUSTRIES LTD.,

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TCA/655/2019HC Madras06 September 2019Bench: Hon`ble Dr Justice VINEET KOTHARI4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The dismissal was based on a Circular instruction issued by the Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019 dated 8th August 2019. This circular stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). In the present cases, the tax effect was stated to be less than this monetary limit. Therefore, the appeals were dismissed as withdrawn. The Court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed three Tax Case Appeals (T.C.A. Nos. 655 to 657 of 2019) before the High Court of Judicature at Madras. These appeals challenged the orders of the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai, dated 8.2.2018. The appeals pertained to Assessment Years 2009-2010, 2012-2013, and 2010-2011. The assessee is M/s. Jansons Industries Ltd. The core dispute involved the classification of expenditure incurred on brand building as either revenue or capital expenditure. The respondent (assessee) did not appear before the High Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and circumstances of the case, the ITAT was correct in concluding that expenditure incurred on brand building was revenue expenditure, despite the assessee accounting for it as 'loans and advances' in its Balance Sheet? (Section 37 of the Income Tax Act, 1961 is implicitly relevant here). 2. Whether, on the facts and circumstances and in law, the ITAT was correct in concluding that the expenditure incurred on brand building was only in the nature of advertisement, not resulting in value addition to the brand, and therefore allowable as revenue expenditure? (Section 37 of the Income Tax Act, 1961 is implicitly relevant here). Contentions: Assessee: The judgment does not record any specific contentions made by the assessee before the High Court as they did not appear. Revenue: The Revenue argued that the ITAT erred in its conclusions regarding the classification of brand building expenditure, particularly questioning its treatment as revenue expenditure when it was shown as 'loans and advances' and arguing it was not merely advertisement but had value addition implications.

Which sections of the Income-tax Act were involved?

Section 260A,Section 37

AI-generated summary — verify with the full judgment below

Judgt. dt. 6.9.19 in T.C.A.655 to 657/19 PCIT V. Jansons Industries Ltd. 1/4 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 6.9.2019 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case (Appeal) Nos.655 to 657 of 2019 Principal Commissioner of Income Tax No.3, Gandhi Road, Salem 636 007. Appellant Vs. M/s.Jansons Industries Ltd., No.129, SND Road, Tiruchangode, Namakkal Dt. 637 211. PAN: AAACJ 5438 J Respondent Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 8.2.2018 made in ITA Nos.613/Mds/2017, 615/Mds/2017 and 614/Mds/2017. For Appellant : Mr.M.Swaminathan Senior Standing Counsel assisted by Ms.V.Pushpa, Jr. Standing Counsel For Respondent : No appearance. COMMON JUDGMENT (Delivered by DR.VINEET KOTHARI,J) These Tax Case Appeals have been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 8.2.2018 made in ITA Nos.613/Mds/2017, 614/Mds/2017 and 615/Mds/2017, for the http://www.judis.nic.in Judgt. dt. 6.9.19 in T.C.A.655 to 657/19 PCIT V. Jansons Industries Ltd. 2/4 Assessment Years 2009-2010, 2012-2013 and 2010-2011 by raising the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the ITAT was right to conclude that the expenditure incurred on brand building was Revenue Expenditure when the assessee itself had accounted the same as "loans and advances" in its Balance Sheet? (ii) Whether on the facts and circumstances of the case and in law, ITAT was right to conclude that the expenditure incurred on brand building was only in the nature of advertisement not resulting in value addition to the brand and hence allowable as revenue expenditure?" 2. When the matters are taken up for admission, learned Senior Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, 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). 3. In the instant cases, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeals filed by the http://www.judis.nic.in Judgt. dt. 6.9.19 in T.C.A.655 to 657/19 PCIT V. Jansons Industries Ltd. 3/4 Revenue are dismissed, as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. (V.K.,J.) (C.S.N.,J.) 6.9.2019 Index : Yes/No Internet : Yes/No ssk. To 1. Principal Commissioner of Income Tax No.3, Gandhi Road, Salem 636 007. 2. Income Tax Appellate Tribunal, 'B' Bench, Chennai. 3. M/s.Jansons Industries Ltd., No.129, SND Road, Tiruchangode, Namakkal Dt. 637 211. 4. The Assistant Commissioner of Income Tax, Circle 1, Namakkal. http://www.judis.nic.in Judgt. dt. 6.9.19 in T.C.A.655 to 657/19 PCIT V. Jansons Industries Ltd. 4/4 DR.VINEET KOTHARI, J. and C.SARAVANAN, J. ssk. T.C.(A) Nos.655 to 657 of 2019 6.9.2019. http://www.judis.nic.in

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