PRINCIPAL COMMISSIONER vs. EMERALD JEWEL INDUSTRY INDIA

PDF · subscribers
TCA/659/2018HC Madras23 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted the submission by the learned Standing Counsel for the Revenue that as per CBDT's Circular No.9 of 2024 dated 17.09.2024, the tax effect in the instant case is less than the monetary limit imposed. Consequently, the appeal could be disposed of without adjudicating the substantial questions of law, keeping them open for future consideration. Recording this submission, the Tax Case Appeal was dismissed for low tax effect. The substantial questions of law were kept open for adjudication at an appropriate stage. No costs were awarded. The specific findings of the ITAT on the merits of the depreciation claim, the reasoning behind those findings, or the ratio decidendi are not detailed in this judgment as the appeal was dismissed on a procedural ground (low tax effect).

What were the facts?

The Revenue has filed a Tax Case Appeal against the order of the Income Tax Appellate Tribunal (ITAT) dated 07.10.2016 in ITA.No.141/MDS/2015. The appeal concerns the assessee, Emerald Jewel Industry India Ltd., and challenges the ITAT's decision to allow the assessee's claim for depreciation on the brand 'Ishtaa'. The Assessing Officer had disallowed this claim for Assessment Year 2010-11, citing a lack of documentary evidence such as proposal letters, sale agreements, or invoices to support the acquisition of the brand. The ITAT's order also covered Assessment Year 2011-12. The Revenue contends that the assessee's claim was a 'colourable device' and that the corporate veil should be lifted.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was justified in allowing the assessee's claim for depreciation on the brand 'Ishtaa' for Assessment Year 2010-11, given the Assessing Officer's finding that the assessee failed to furnish any proposal/offer letter, agreement, or invoice to prove the acquisition of the brand, suggesting a colourable device and warranting lifting of the corporate veil? (Section 32 of the Income Tax Act, 1961) 2. Whether the ITAT was justified in allowing the assessee's claim for depreciation on the brand 'Ishtaa' for Assessment Year 2011-12, when the disallowance for Assessment Year 2010-11 was accepted by the assessee, and the disallowance for AY 2011-12 was a consequence of the AY 2010-11 disallowance? (Section 32 of the Income Tax Act, 1961) 3. Whether the ITAT was justified in allowing the assessee's claim for depreciation on the brand 'Ishtaa' for Assessment Year 2011-12, leading to contradictory outcomes for similar issues in Assessment Years 2010-11 (disallowed) and 2011-12 (allowed)? (Section 32 of the Income Tax Act, 1961) Assessee's arguments: Not recorded. Revenue's arguments: The Assessing Officer found no documentary evidence of brand acquisition, suggesting a colourable device. The disallowance for AY 2011-12 was a consequence of the AY 2010-11 disallowance, leading to inconsistent results.

Which sections of the Income-tax Act were involved?

Section 32,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.659 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.10.2024 CORAM THE HON'BLE MR.JUSTICE R.SURESH KUMAR AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case Appeal No.659 of 2018 Principal Commissioner of Income Tax No.63, Race Course Road, Coimbatore. .... Appellant Vs. Emerald Jewel Industry India Ltd., 230, T.V.Samy Road (East) R.S.Puram, Coimbatore. .... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'B' Bench Chennai, dated 07.10.2016 in ITA.No.141/MDS/2015. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For Respondent : Mr.A.S.Sriraman J U D G M E N T (Delivered by R.SURESH KUMAR, J.) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, Chennai by raising the following substantial questions of law: 1 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.659 of 2018 1. Whether on the facts and circumstances of the case, the ITAT was justified in allowing the assessee's claim of depreciation on the brand 'Ishtaa' when the assessing officer for the Asst.Year 2010-11 has clearly brought on record that the assessee company failed to furnish any proposal / offer letter showing the proposal of sale of Brand name; any agreement entered into for purchase of brand name and no invoice was produced and thus it can be stated that the assessee company claiming to have acquired the brand is a colourable device and the corporate veil is liable to be lifted to get the true nature of the transaction? 2. Whether the Appellate Tribunal was justified in allowing the assessee's claim of depreciation on the brand 'Ishtaa' for the Asst.Year 2011-12 when the disallowance made for the Asst.Year 2010-11 was accepted by the assessee and the disallowance of the said depreciation for the Asst.Year 2011-12 is a consequence of the disallowance of the depreciation for the Asst.Year 2010-11? 3. Whether the Appellate Tribunal was justified in allowing the assessee's claim of depreciation on the brand 'Ishtaa' for the Asst.Year 2011-12 thus leading to two different results for two different Asst.Years 2 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.659 of 2018 on a similar issue viz., disallowance of depreciation for the Asst.Year 2010-11 and allowing for the Asst.Year 2011-12? 2. It is brought to our notice by the learned Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit imposed and therefore, the appeal can be disposed of, keeping the substantial questions of law raised in this appeal open for adjudication at a later point of time. 3. Recording the aforesaid submission made by the learned Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication at appropriate stage. No costs. (R.S.K.,J.) (C.S.N.,J.) 23.10.2024 NCS : Yes/No

KST To The Income Tax Appellate Tribunal 'B' Bench, Chennai. 3 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.659 of 2018 R.SURESH KUMAR, J. AND C.SARAVANAN, J. KST T.C.A.No.659 of 2018 23.10.2024 4 of 4 https://www.mhc.tn.gov.in/judis

More judgments on Section 32

All 2,762 judgments and leading authorities on Section 32 →

Recent GST High Court judgments

Search GST case law →