Madras High Court
Commissioner Of Income Tax-I vs M/S.Tvs Motor Company Ltd on 5 January, 2026
Author: Anita Sumanth
Bench: Anita Sumanth
T.C.(A).No.330 of 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.01.2026
CORAM :
THE HONOURABLE DR.JUSTICE ANITA SUMANTH
and
THE HONOURABLE MR.JUSTICE MUMMINENI SUDHEER
KUMAR
T.C.(A).No.330 of 2011
Commissioner of Income Tax-I,
Chennai.
.. Appellant
vs
M/s.TVS Motor Company Ltd.,
No.29, Haddows Road,
Chennai – 600 006.
.. Respondent
Prayer : Appeal filed under Section 260A of the Income-Tax Act against
the order of the Income-Tax Appellate Tribunal, Chennai ‘C’ Bench dated
21.12.2010 in ITA 1017/Mds/2009 Assessment Year 2005 – 06.
For Appellant : Dr.S.Sathiya Narayanan
Senior Standing Counsel
For Respondent : Mr.Vikram Vijayaraghavan
for M/s Subbaraya Aiyar Padmanabhan
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T.C.(A).No.330 of 2011
JUDGMENT
(Delivered by Dr. ANITA SUMANTH.,J) We have heard Dr.S.Sathiya Narayanan, learned Senior Standing Counsel for the appellant / Department and Mr.Vikram, learned counsel for the respondent / assessee.
2. Seven substantial questions of law have been admitted on 21.09.2011 in this appeal which relates to Assessment Year (AY) 2005 – 06.
3. The first question of law, discussion and conclusion in relation thereto are set out below:-
“Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the expenditure on replacement of dies and moulds were to be allowed as revenue expenditure, contrary to the decision of the Supreme Court in the case of Saravana Mills Ltd (293 ITR
201) and similar other decisions especially when such expenditure was not debited in the Profit & Loss Account but only claimed in the Income Tax Adjustment Statement?”
4. This question is covered by a decision of this Court in the assessee’s own case in Commissioner of Income Tax v TVS Motors Limited1 for AY 2003-04. After a detailed discussion, and referring to the 1364 ITR 1 (Mad) 2/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 2 cases in CIT Vs. Mahalakshmi Textile Mills Ltd , Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd.3, CIT Vs. Sri Mangayarkarasi Mills P. Limited4 and CIT Vs. Ramaraju Surgical Cotton Mills5, the issue was held in favour of the assessee and the relevant paragraphs are extracted below:-
‘31. Applying the ratio of the decision cited above, when we look into the facts of the above cases, it is evident that with regard to the moulds and dies attached to the machinery like press designs specification, moulds and dies are not independent of the plant and machinery, but are parts of the machinery. Once the dies are worn out, the machines cannot turn out the product to the business specifications and this has to be obtained only on a replacement of the dies and moulds, a fact which is not refuted by the revenue. It is no doubt true that the assessee claimed depreciation on dies and moulds. Yet in the decision in the case of CIT Vs. Mahalakshmi Textile Mills Ltd., reported in (1967) 66 ITR 710 (SC), the Apex Court pointed out that all questions whether of law or of fact, which relate to the assessment year of the assessee could be raised in any year under consideration before the Officer as well as before the Income Tax Appellate Tribunal too and if, for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, the grant of relief to an assessee is justified on another ground, the Revenue is bound to consider such claim of granting the relief. The Apex Court pointed out that the right of the assessee to the relief is not restricted to the plea raised by him. On the facts before us, when the dies and moulds were attached to the machine to 2 66 ITR 710 3 293 ITR 201 4 315 ITR 114 5 294 ITR 328 3/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 manufacture the designed product, we have no hesitation to accept the plea of the assessee that the claim would fall for consideration only under Section 31 of the Act.
32. In the unreported decision of this Court dated 27.04.2012 in Tax Case (Appeal).No.1011 of 2005 (The Commissioner of Income Tax, Madurai Vs. M/s.Machado Sons) on the question of repair made to a ship, this Court pointed out that when the object of the expenditure was not for bringing into existence a new asset or to obtain a new advantage, the said expenditure qualifies to be considered as current repairs under Section 31 of the Act. In so holding, after referring to the decision of the Apex Court in the case of CIT Vs. M/s.Saravana Spinning Mills P.Ltd., reported in (2007) 293 ITR 201, this Court further pointed out to the decision of the Apex Court where it cautioned that all repairs are not current repairs on Section 31(1) of the Act; Section 31(1) of the Act limits the scope of allowability of expenditure as deduction in respect of repairs made to machinery, plant or furniture by restricting it to the concept of "current repairs". Thus, this Court pointed out that what is allowable as revenue expenditure under Section 37 of the Act are those expenditure other than one falling for consideration under Sections 30 to 36 of the Act.
The Apex Court further pointed out the example that when the picture tube in a television set is replaced, such repairs would come within the connotation of the phrase "current repairs". Thus, applying these two decisions, we have no hesitation in rejecting the Revenue's appeal. We hold that the claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs. To that extent, we modify the order of the Tribunal.’ This question of law is hence answered in favour of the assessee.
5. The second question of law, discussion and conclusion 4/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 thereupon, are as below:-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that 100% depreciation on the cost of “structures” had to be granted even though the said assets had a long life and the expenditure had resulted in assets/advantage of enduring nature?
6. The assessing officer effected a disallowance in respect of a claim of 100% depreciation qua certain constructions at the area offices of the assessee at Coimbatore and Delhi. The order of assessment does not contain any discussion as to the nature of those constructions and the officer has proceeded merely on the basis of amendment in the Income- Tax Act to the effect that current repairs does not include expenditure in the nature of capital expenditure.
7. In first appeal, the disallowance was set aside. The order of the Commissioner of Income-Tax (Appeals) is detailed and he has categorized the nature of works carried out by the assessee as follows:-
Delhi Area Office Date Nature Amount (Rs.) 01.04.2004 Electrical MCB Work 9670 14.04.2004 Office Interior Work 74,808 (Chandigarh) 15.04.2004 Delhi area interior work 1,70,923 09.06.2004 Cost of wall papers 79,991 13.10.2004 Interior Work 9,929 Total 3,45,321 5/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 Coimbatore Area Office Date Nature Amount (Rs.) 29.09.2004 Interior partition work 73,806 20.10.2004 Interior partition work 1,06,657 27.08.2004 Interior partition work 4,57,318 29.09.2004 Interior partition work 5,22,065 Total 11,59,846 Grand total 15,05,167
8. A glance at the description of work carried out, clearly reveals to us that the nature of the work is only temporary. That apart, CIT (Appeals) accepting the stand of the assessee, has also referred to the order of the Appellate Tribunal for the previous assessment year, wherein, the Tribunal had accepted the case of the assessee on identical facts and legal position.
9. As against the order of the CIT (Appeals), the Department filed an appeal before the Income tax Appellate Tribunal (Tribunal/ITAT), which confirmed the order of the CIT (Appeals), and rightly so.
10. The only argument put forth by Dr.S.Sathiya Narayanan is that the order of the Tribunal is non-speaking. While that may be so, we find that the order of the CIT (Appeals) is detailed and has taken into account the facts and legal position in proper perspective. That apart, the order of 6/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 the Tribunal dated 2.05.2008 for AY 2003-04 confirming the order of the CIT (Appeals) on the identical issue has not been challenged by the Revenue. Having accepted the conclusion on this score for the earlier year, there is no justification in the challenge for this year, except if specific reasons are assigned and if the legal/factual position varies from the previous year. In light of the discussion as above, we confirm the conclusion of CIT (Appeals) and Tribunal on this issue and answer the question in favour of the assessee.
11. The third question of law, discussion and conclusion in regard thereto are as follows:-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the disallowance of weighted deduction under Section 35/35(2AB) in respect of work-in-progress?
12. The question relates to expenditure on research and development and on identical facts and legal position for the previous assessment year ie., AY 2003-04, the Tribunal had accepted the claim of the assessee. The conclusion was challenged by the Revenue and in TVS Motors Limited6, this Court has confirmed the order of the Tribunal finding that reliance on the decision reported in CIT v Rane Brake linings Ltd7 was correct.
6Footnote supra 1 7255 ITR 395 7/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011
13. We do not have the benefit of that decision of the Tribunal. However, since both parties would accede to the position that this issue is covered in favour of the assessee, this question of law is answered in favour of the assessee.
14. The fourth question of law, discussion and conclusion are below:-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee was entitled to claim deduction for entry tax set off against sales tax?”
15. The identical issue had arisen in the previous case as well. The case of the assessee was that the Tamil Nadu General Sales Tax Act provided for a set off of Entry Tax paid as against the sales tax paid by the assessee. Hence the Department proceeded on the basis that having obtained a set-off as against the Sales Tax Act, Entry tax cannot be claimed as a deduction by the assessee.
16. The assessee concurrently succeeded in first and second appeals and as against the order of the Tribunal for the previous year, the Department approached the High Court. Its plea was negated and the discussion reads as follows:-
33. On the question of deduction under Entry Tax, the Tribunal rightly considered the claim of the assessee for deduction of entry tax payment made 8/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 by the assessee. The Assessing Officer admitted that the deduction on account of Entry Tax is allowable if the payment is actually made and admittedly, payment of entry tax has been made by the assessee; the entry tax paid would get the adjustment as against the Sales Tax liability, consequently, any deduction would amount to total deduction.
34. We do not agree with the said line of reasoning. The payment made on the entry tax demand and its adjustment against the Sales Tax assessment has nothing to do with deduction provision under the Income Tax Act on the entry tax paid. Consequently, we reject the Revenue's plea on double deduction. The provisions of Sales Tax Act and the Income Tax Act are on the different lines. The adjustment or the treatment given under the Sales Tax Act cannot be read in to the Income Tax Act and the only question is whether the entry tax actually paid by the assessee during the year under consideration is allowable as deduction or not. The Tribunal rightly allowed the deduction claimed by the assessee on account of tax payment made under Entry Tax Act.
Consequently, we reject the Revenue's appeal.”
17. This decision has attained finality and no appeal has been filed before the Supreme Court. Dr.Sathiya Narayanan would however persist, pointing out that the assessee is availing a double benefit. That apart, he refers to Section 43B, as per which, the assessee would be entitled to a claim of expenditure only on actual payment. Since in this case, entry tax has not been paid but only set-off, Section 43B would act as a bar to such claim.
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18. Though, there may be some merit in the submissions, since the adverse decision of the Court on this very issue for the previous year has been accepted by the Department, there is no reason for us to hold otherwise. This question is answered in favour of the assessee.
19. The fifth question of law, discussion and conclusion in relation thereto, are set out below :-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition made by the Assessing Officer towards difference between sales tax deferred loan amount and the settlement made against the loan on Net Present Value basis?”
20. The assessee had, in the computation statement, disclosed an amount of Rs.36,97,26,960/- as a discount on prepayment of Karnataka Sales Tax Deferral Loan, treating the same as capital and reducing the same from computation of business income.
21. The explanation tendered by the assessee was this. The Karnataka State Government has extended a sales tax deferral scheme as an incentive for the development of industries, as per which the remittance of sales tax collected would be deferred, and provided to be paid in instalments.
22. During the previous year relevant to the present assessment year, the Government of Karnataka brought forth a new scheme where a 10/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 discount/remission of sales tax was available to an assessee who had availed the earlier deferral sales tax scheme, and who comes forward to pay the balance of the unpaid sales tax in a single instalment.
23. The assessee availed the scheme and remitted the entirety of the remaining sales tax dues of Rs.32.23 crores in one shot. In doing so, it obviated the necessity for future deferrals, and saved an amount of Rs.36.94 crores (Rs.32.23 crores) computed, having regard to the Net Present Value (NPV) as on date when the payment was made. This amount was claimed on capital account.
24. The assessing authority denied the relief and in appeal, both CIT (Appeals) and the Tribunal accepted the assessee’s case. In appeal before us, learned Senior Standing Counsel reiterates the discussion in the assessment order, also pointing that the assessing authority could have invoked the provisions of Section 43B, which was not done.
25. Both learned counsel cite the judgement of the judgement of the Supreme Court in Commissioner of Income Tax v Balakrishna Industries Ltd8 as being applicable to the present case. By that judgment, rendered in the context of deduction under Section 80 HHC of the Act, the Supreme Court disposed a batch of matters, including an appeal in the case of Commissioner of Income Tax v M/s. Sulzer India Limited 9 relying 8 300 CTR (209) SC 9 2010 06 (ITR) 604 11/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 upon which the Tribunal had accepted the assessee’s case.
26. The Supreme Court has extracted the operative portion of the decision of the Bombay High Court, which we may usefully reproduce here as well:-
‘9. In a very detailed and exhaustive judgment rendered by the High Court, it has discussed the view taken by the Assessing Officer, which was confirmed by the Commissioner of Income Tax (Appeals). Thereafter, the High Court noted in detail the manner in which the Tribunal has dealt with the issue. A perusal of the judgment would show that the High Court took into consideration the provisions of Section 41 of the Act and the conditions which are required to be satisfied for bringing a particular receipt as “income” within the ambit thereof and found that those conditions are not satisfied in the present case. The High Court also repelled the contention of the Revenue that the assessee obtained the benefit of reduction of sales tax liability under Section 43B of the Act as per the CBDT Circular No. 496 dated 25th September, 1987. The relevant portion of the discussion in this behalf reads as under:
“It is not possible to agree with Mr. Gupta. Because, premature payment of Sales Tax already collected but its remittance to the Government, as Mr. Gupta envisages, is not covered by this provision else the subsections and particularly section 43B(1) would have been worded accordingly. Therefore Section 43B has no application. Insofar as applicability of section 41(1)(a), there also the applicability is to be considered in the light of the liability. It is a loss, expenditure or trading liability. In this case, the scheme under which the Sales Tax liability was deferred enables the Assessee to remit the Sales Tax collected from the customers or consumers to the Government not immediately but as agreed 12/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 after 7 to 12 years. If the amount is not to be immediately paid to the Government upon collection but can be remitted later on in terms of the Scheme, then, we are of the opinion that the exercise undertaken by the Government of Maharashtra in terms of the amendment made to the Bombay Sales Tax Act and noted above, may relieve the Assessee of his obligation, but that is not by way of obtaining remission. The worth of the amount which has to be remitted after 7 to 12 years has been determined prematurely. That has been done by find out its NPV. If that is the value of the money that the State Government would be entitled to receive after the end of 7 to 12 years, then, we do not see how ingredients of sub section (1) of section 41 can be said to be fulfilled. The obligation to remit to the Government the Sales Tax amount already recovered and collected from the customers is in no way wiped out or diluted.
The obligation remains. All that has happened is an option is given to the Assessee to approach the SICOM and request it to consider the application of the Assessee of premature payment and discharge of the liability by finding out its NPV. If that was a permissible exercise and in terms of the settled law, then, we do not see how the Assessee can be said to have been benefited and as claimed by the Revenue. The argument of Mr. Gupta is not that the Assessee having paid Rs.3.37 crores has obtained for himself anything in terms of section 41(1), but the Assessee is deemed to have received the sum of Rs.4.14 crores, which is the difference between the original amount to be remitted with the payment made. Mr. Gupta terms this as deemed payment and by the State to the Assessee. We are unable to agree with him. The Tribunal has found that the first requirement of section 41(1) is that the allowance or deduction is made in respect of the loss, expenditure or a trading liability incurred by the Assessee and the other requirement is the Assessee has subsequently 13/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 obtained any amount in respect of such loss and expenditure or obtained a benefit in respect of such trading liability by way of a remission or cessation thereof. As rightly noted by the Tribunal, the Sales Tax collected by the Assessee during the relevant year amounting to Rs.7,52,01,378/- was treated by the State Government as loan liability payable after 12 years in 6 annual/equal installments. Subsequently and pursuant to the amendment made to the 4th proviso to section 38 of the Bombay Sales Tax Act, 1959, the Assessee accepted the offer of SICOM, the implementing agency of the State Government, paid an amount of Rs.3,37,13,393/- to SICOM, which, according to the Assessee, represented the NPV of the future sum as determined and prescribed by the SICOM. In other words, what the Assessee was required to pay after 12 years in 6 equal installments was paid by the Assessee prematurely in terms of the NPV of the same. That the State may have received a higher sum after the period of 12 years and in installments. However, the statutory arrangement and vide section 38, 4th proviso does not amount to remission or cessation of the Assessee's liability assuming the same to be a trading one. Rather that obtains a payment to the State prematurely and in terms of the correct value of the debt due to it. There is no evidence to show that there has been any remission or cessation of the liability by the State Government. We agree with the Tribunal that one of the requirement of section 41(1)(a) has not been fulfilled in the facts of the present case.”’
27. The aforesaid view of the High Court has been upheld, the Supreme Court expressing the view that it is without blemish.
28. In the present case also, we do not find any evidence for remission or cessation of liability to the State Government. Rather, the 14/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 assessee has prepaid the entire amount of dues, basing the computation on the NPV as on date of payment. In light of the discussion as aforesaid, and applying the ratio of the judgement in the case of Balakrishna Industries Limited10 the categorisation of the amount on capital account is upheld and the question is answered in favour of the assessee.
29. The sixth question of law, discussion and conclusion in relation thereto are set out below:-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the disallowance of upfront fee of Rs.6,62,70,751/- made to certain foreign entities even though the said payment was in respect of processing ECB Loan which involved rendering of services of a technical or managerial nature?”
30. This issue arises for the first time in this assessment year. The issue relates to a disallowance of a sum of Rs.6,62,70,751/- (Rs.6.62 crores approx) on the ground that the assessee ought to have deducted tax at source under Section 40(a)(i) of the Act thereupon.
31. Remittances of Rs.3.29 crores (approx) and Rs.3.33crores (approx) had been made by the assessee to Asia Pacific Investments PLC, UK and Regional Capital Private Limited, Singapore respectively, and admittedly, no deduction of tax was made under Section 195 of the Act. The assessee adopted the view that the payments constituted business 10 Footnote supra 8 15/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 profits of the payee not liable to tax in India as the payee has no permanent establishment in India.
32. Per contra, the assessing authority was of the view that the amounts had been remitted for technical services rendered by the two payees in facilitating the availment of External Commercial Borrowings (ECB) by the assessee and hence such consideration ought to have been subject to tax deduction at source. The assessment was thus concluded disallowing the entire amount remitted, under Section 40(a)(i) of the Act.
33. In first appeal before the CIT (Appeals), the assessee took the additional argument of the benefit available under the Double Taxation Avoidable Agreements (DTAA) between India & United Kingdom, and India & Singapore, specifically Article 13 of the DTAA between India & UK and Article12 of the DTAA between India & Singapore.
34. The CIT (Appeals) negated the submission that the services were non-technical in nature. On an examination of the detailed documentation that had been placed before the officer, being the contracts and agreements inter se parties, and noting the nature of services rendered, he concluded that the services amounted to technical services, liable to deduction of tax at source.
35. However, both treaties contain the ‘make available’ clause as per which, the remittances would be liable to tax only if, in addition to the 16/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 rendition of technical services, the technology relating to those services had itself been made available to the payer / assessee. The CIT (Appeals) thus accepted the case of the assessee, as the know-how relating to the technical services had, admittedly not be transferred to the assessee. Assailing the conclusion of the CIT(A), appeal was filed by the Revenue before the Tribunal that rejected the appeal. Hence the present appeal.
36. The services rendered by the payees are, undoubtedly, technical in nature. In fact, the assessee has not challenged the finding of the CIT(A) in this regard and his conclusions in regard to the nature of services has attained finality. To this end, the conclusion of the Tribunal that the services rendered by the payee do not constitute technical services is erroneous and we set aside the same.
37. The CIT(A) has allowed the appeal of the assessee being of the view that the assessee has received only the services per se, and not the expertise/know-how in the technical services.
38. Article 13 of the DTAAs between India and the UK, and Article 12 of the DTAA between India and Singapore, both dealing with Royalties and FTS, are extracted below:-
Article 13 of the DTAA between India and the UK
1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other 17/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 State.
.......
4. For the purposes of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term “fees for technical services” means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which :
(a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or
(b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received ; or
(c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design.
Article 12 of DTAA between India and Singapore
1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
.......
4. The term "fees for technical services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services :
(a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or
(b) make available technical knowledge, 18/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or
(c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein.
39. As per Articles 13(4)(c) and 12(4)(b) technical services are defined as services where technical knowledge, experience, skill, know how or the processes, are made available to the payer. It is only if the process behind the technical service is transferred to the payer, that liability would be attracted under the DTAA. (See Commissioner of Income tax & Anr v De Beers India Minerals (P) Ltd11).
40. In the present appeal, it is nobody’s case that the expertise of the payee had been made available to the assessee so as to enable the assessee to obtain ECB without the assistance of the payee henceforth, and in future. Applying the provisions of Section 90, the more beneficial of the position between domestic and treaty law would be available to the assessee and we draw support from the judgment of the Supreme Court in Union of India & Anr v Azadi Bachao Andolan & Anr12 in this regard. As a sequitur, the amounts are not liable to tax in terms of Article 13(4)(c) and 12(4)(b) of the DTAA between India & UK and India & Singapore 11346 ITR 467 12 263 ITR 706(SC) 19/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 respectively. This question is answered in favour of the assessee.
41. The seventh question of law, the discussion and conclusion in relation thereto, are set out below:-
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the disallowance of commission paid to foreign agents of Rs.9,53,00,671/- even though the foreign agents were rendering services of a technical or managerial nature in promoting the assessee’s business abroad and when there was no difference between the definition given for “fees for technical services” under the DTAA and under Section 9(1)(vii) of the Income Tax Act?”
42. Both learned counsel would accede to the position that the issue relating to payment of commission to foreign agents arose in assessment years 1991-92, 1992-93 and 1994-95 and the Tribunal in ITA Nos. 388, 389 & 390 of 1998, on identical facts and position of law, had decided the matter in favour of the assessee. This order has attained finality and has not been challenged by the Department.
43. A challenge on this ground however, appears to have been raised for AY 2002-03 in TCA No. 739 of 2009, that came to be dismissed on 11.07.2025 by the First Bench of this Court citing the aforesaid order of the Tribunal. Since no material is before us to show that there is a variation in facts and the legal position for the present assessment year, the ratio of the aforesaid orders would apply on all 20/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 fours. This question of law also is answered in favour of the assessee.
44. In light of the aforesaid detailed discussion, this tax case (appeal) is dismissed. No costs.
[A.S.M, J.] [M.S.K, J.] 05.01.2026 Index:Yes/No Neutral Citation:Yes/No ssm To
1.The Commissioner of Income Tax-I, Chennai.
2.The Income-Tax Appellate Tribunal ‘C’ Bench, Chennai.
21/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm ) T.C.(A).No.330 of 2011 DR. ANITA SUMANTH,J.
and MUMMINENI SUDHEER KUMAR,J.
ssm T.C.(A).No. 330 of 2011 05.01.2026 22/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 06/02/2026 04:22:38 pm )