Madras High Court
The Commissioner Of Income Tax vs M/S.Danfoss Industries Pvt. Ltd on 26 August, 2022
Author: R.Mahadevan
Bench: R. Mahadevan, Mohammed Shaffiq
T.C.A.Nos.552 to 554 of 2018
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.Nos.552 to 554 of 2018
The Commissioner of Income Tax,
Chennai. ... Appellant in all TCAs
Versus
M/s.Danfoss Industries Pvt. Ltd.,
296, Old Mahabalipuram Road,
Sholinganallur
Chennai - 600 119. ... Respondent in all TCAs
(PAN No.AABCD0321M)
Appeals preferred under Section 260A of the Income Tax Act, 1961,
against the common order of the Income Tax Appellate Tribunal, Chennai “D”
Bench, dated 23.02.2017 in I.T.A.Nos.1131/Mds/2016, 1132/Mds/2016 and
1582/Mds/2016.
For Appellant in
all TCAs' : Mr.T.Ravi Kumar
Senior Standing Counsel
For Respondent in
all TCAs' : Mr.R.Sivaraman
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https://www.mhc.tn.gov.in/judis
T.C.A.Nos.552 to 554 of 2018
COMMON JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.) These tax case appeals have been filed by the appellant / Revenue, challenging the common order dated 23.02.2017 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench in I.T.A.Nos.1131/Mds/2016, 1132/Mds/2016 and 1582/Mds/2016, relating to the assessment years 2004-05, 2009-10 and 2011-11 respectively, by raising the following substantial questions law:-
“(i) Whether the Tribunal was right in deleting the Transfer Pricing adjustment of Rs.30,89,628/- without appreciating the fact of under utilization of production capacity and further not acknowledging the fact that expenses relating to repairs to premises, power and fuel do not depend on the capacity utilization and are rather proportionate to production itself, requiring adjustment on these factors?
(ii) Whether the Tribunal was right in holding that expenses claimed towards acquisition of License to use MATFLOW software through a service arrangement with Danfoss IT Denmark Company is acquisition of a right, which is having no enduring benefit and therefore is to be allowed as revenue expenditure Page 2/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.552 to 554 of 2018 under Section 37 of the I.T.Act especially when the Assessing getting enduring advantage over a period of time and therefore capital in nature?
(iii) Whether the Tribunal was right in deleting the disallowance of revenue expenditure claim on MATFLOW software which provides an enduring benefit to the Assessee by providing high functional utility to generate standardized templates to integrated sales, finance and logistic operation, use of ERP systems which is uniform/customs made for usage among the group companies and for support software to supplement routine operations and therefore is to be classified as capital expenditure?”
2. When the 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 appeal 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 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 appeals, wherein, the tax effect is Page 3/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.552 to 554 of 2018 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.)
26.08.2022
Internet : Yes
Index : Yes / No
rns
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T.C.A.Nos.552 to 554 of 2018
To
1. The Income Tax Appellate Tribunal, 'D' Bench, Chennai.
2.The Commissioner of Income Tax (Appeals)-1, Chennai - 34.
3. The Deputy Commissioner of Income Tax, Company Circle-I (4) Chennai - 34.
Page 5/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.552 to 554 of 2018 R. MAHADEVAN, J.
and MOHAMMED SHAFFIQ, J.
rns T.C.A.Nos.552 to 554 of 2018 26.08.2022 Page 6/6 https://www.mhc.tn.gov.in/judis