COMMISSIONER OF INCOME TAX vs. M/S.RAJ TELEVISION NETWORK

T.C.A.Nos.926 and 927 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 17.08.2022 CORAM THE HON'BLE Mr. JUSTICE R. MAHADEVAN AND THE HON'BLE Mr. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.926 and 927 of 2015 The Commissioner of Income Tax Media Circle-II Chennai

.. Appellant in both T.C.As Vs. M/s.Raj Television Network Limited 32, Poes Road, 2nd Street Teynampet Chennai 600 018 PAN : AAACR 3580P .. Respondent in both T.C.As Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 17.04.2015 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai, in respective I.T.A.Nos. 1521/Mds/2013 and 1522/Mds/2013. For Appellant : Mr.M.Swaminathan in both T.C.As Mrs.V.Pushpa

Standing Counsels For Respondent : No appearance in both T.C.As 1/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.926 and 927 of 2015 C O M M O N J U D G M E N T (Judgment was delivered by R. MAHADEVAN, J.) These tax case appeals have been filed by the appellant/Revenue, calling in question the correctness of the common order dated 17.04.2015 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai, in respective I.T.A.Nos.1521/Mds/2013 and 1522/Mds/2013, for the respective assessment years 2004-05 and 2009-10. 2. By order dated 17.11.2015, this Court admitted the aforesaid tax case appeals on the following substantial questions of law : T.C.A.No.926 of 2015 : “1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that re-opening under section 147 is invalid? 2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that re-opening is done on the basis of mere change of opinion and dismissed the appeal of the revenue when the issue of amortization of cost of film rights has neither been discussed nor an opinion is formed by the Assessing Officer there is no question of change of opinion? 2/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.926 and 927 of 2015 3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the copyrights in films are found incapable of sustained exploitation after the first broadcast and hence considering the principles of consistency and nature of expenditure, the same has to be treated as revenue in nature, since the assessee does not derive enduring benefit, when films once broadcasted are not going out of shelf? 4) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right, in law, in reversing the capitalization of the expenses by the Assessing Officer when the fact remains that as per accounting standards issued by the Institute of Chartered Accountants of India, copyrights in films are intangible assets and writing off of entire cost of the acquiring such rights at the first broadcast itself on the ground that future revenues are not ascertainable with reasonable accuracy, cannot be accepted as it neither adheres to be principles of accounting standards nor income of law?” T.C.A.No.927 of 2015 : “1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the copyrights in films are found incapable of sustained exploitation after the first broadcast and hence considering the 3/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.926 and 927 of 2015 principles of consistency and nature of expenditure, the same has to be treated as revenue in nature, since the assessee does not derive enduring benefit, when films once broadcasted are not going out of shelf? 2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right, in law, in reversing the capitalization of the expenses by the Assessing Officer when the fact remains that as per accounting standards issued by the Institute of Chartered Accountants of India, copyrights in films are intangible assets and writing off of entire cost of the acquiring such rights at the first broadcast itself on the ground that future revenues are not ascertainable with reasonable accuracy, cannot be accepted as it neither adheres to be principles of accounting standards nor income of law?” 3. When these matters were 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 these appeals are less than the threshold limit. 4. In the light of the aforesaid submissions made by the learned counsel 4/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.926 and 927 of 2015 for the appellant/Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. [R.M.D,J.] [M.S.Q, J.] 17.08.2022

Index : Yes / No gya To 1.The Commissioner of Income Tax Media Circle-II Chennai 2.The Assistant Commissioner of Income Tax Media Circle-II Chennai 3.The Commissioner of Income Tax (Appeals)-VI Chennai 4.The Income Tax Appellate Tribunal 'A' Bench, Chennai R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. 5/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.926 and 927 of 2015 gya T.C.A.Nos.926 and 927 of 2015 17.08.2022

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