THE COMMISSIONER OF INCOME T vs. M/S INFOS INDUSTRIES LTD

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TCA/766/2015HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court, in light of the submissions made by the learned counsel for the appellant/Revenue regarding CBDT Circular No. 17/2019, dismissed the present appeal as withdrawn. The Court noted that the tax effect in the appeal was less than the monetary limit imposed by the circular. The substantial questions of law were kept open for determination in an appropriate case. No costs were awarded. The judgment does not provide findings on the merits of the substantial questions of law, as the appeal was disposed of on procedural grounds related to the tax effect.

What were the facts?

The Commissioner of Income Tax, Mumbai (the Revenue) filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 30.04.2014 passed by the Income Tax Appellate Tribunal (ITAT), Mumbai 'I' Bench. The appeal pertains to Assessment Year 2003-04 and concerns the classification of technical service fees paid by M/s. Infos Industries Ltd. (the Assessee) to M/s. Hall, DIL and KAP and Co. as revenue expenditure rather than capital expenditure. The High Court admitted the appeal on substantial questions of law.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the technical service fee payable to M/s. Hall, DIL and KAP and Co. are to be treated as revenue expenditure and not capital expenditure? (Question of law) 2. Is not the finding of the Tribunal bad by holding that the period of 5 years cannot be treated as a benchmark to treat the expenditure as revenue expenditure as it was renewable every five years? (Question of mixed law and fact) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue brought to the notice of the Court CBDT Circular No. 17/2019 dated 08.08.2019, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in this appeal is less than the threshold limit.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

TCA.No.766 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No. 766 of 2015 The Commissioner of Income Tax, Mumbai

.. Appellant Versus M/s. Infos Industries Ltd., Meghal Industrial Estate Gala No.22, 1st Floor, Devi Dayal Road, Mulund – West, Mumbai 400 080

.. Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Mumbai 'I' Bench, dated 30.04.2014 passed in ITA No.2065/Mds/2013 in respect of Assessment Year 2003-04. For Appellant : Mr. T.Ravikumar Standing Counsel 1/4 https://www.mhc.tn.gov.in/judis TCA.No.766 of 2015 JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) This Tax Case Appeal has been filed by the appellant / revenue, questioning the correctness of the order dated 30.04.2014 passed by the Income Tax Appellate Tribunal, Mumbai 'I' Bench in ITA No.2065/Mds/2013 for the Assessment Year 2003-04. 2. On 01.12.2015, this tax case appeal is admitted by this Court on the following substantial questions of law; ' 1. Whether on the facts and circumstances of the case the Tribunal was right in holding that the technical service fee payable to M/s.Hall, DIL and KAP and Co. are to be treated as revenue expenditure and not capital? 2. Is not the finding of the Tribunal bad by holding that the period of 5 years cannot be treated as Benchmark to treat the expenditure as revenue expenditure as it was renewable every five years?” 3. When the matter was taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular 2/4 https://www.mhc.tn.gov.in/judis TCA.No.766 of 2015 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. 4. 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.] 26.08.2022 msr

Index : Yes / No To 1. The Assistant Commissioner of Income Tax, Circle 2(2), Mumbai 2. The Commissioner of Income Tax (Appeals)-5, Mumbai. 3. The Income Tax Appellate Tribunal, Mumbai 'I' Bench. 3/4 https://www.mhc.tn.gov.in/judis TCA.No.766 of 2015

R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr T.C.A.No. 766 of 2015 26.08.2022 4/4 https://www.mhc.tn.gov.in/judis

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