TCA.Nos.886, 892, 893, 894 of 2017

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 11.09.2023

CORAM :

THE HONOURABLE MR. JUSTICE R. MAHADEVAN

and

THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ

TCA.Nos.886, 892, 893 & 894 of 2017

Commissioner of Income Tax

Chennai ... Appellant in all Tax Case

Appeals

Vs

M/s. Shriram City Union Finance Ltd.,

Mookambika Complex,

No.4 Lady Desika Road,

Mylapore Chennai - 600 004.

... Respondent in all Tax Case Appeals

Appeals preferred under Section 260A of the Income Tax Act, 1961,

against the order of the Income Tax Appellate Tribunal, Chennai “B” Bench,

dated 29.01.2016 in I.TA.No.868/Mds/2015, I.TA.No.869/Mds/2015,

I.TA.No.870/Mds/2015 and I.TA.No.871/Mds/2015.

For Appellant

:

Mr.J.Narayanasamy in all cases

For Respondent

:

Mr.R.Sivaraman in all cases

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TCA.Nos.886, 892, 893, 894 of 2017

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 order dated 29.01.2016 passed by the Income Tax Appellate

Tribunal,

Chennai

'B'

Bench,

in

I.TA.No.868/Mds/2015,

I.TA.No.869/Mds/2015, I.TA.No.870/Mds/2015 and I.TA.No.871/Mds/2015.

respectively, relating to the assessment years 2010-2011 and 2011-2012, by

raising the following substantial questions of law:-

In TCA.Nos.886 and 892 of 2017:-

“(i) Whether on the facts and in the circumstances of the

case, the Tribunal was right in holding that the royalty paid by

the assessee towards the use of logo of Shriram Chits and

Investments P Ltd is to be treated as revenue expenditure

without appreciating that as per the section 32 w.e.f. 1.4.99 the

royalty is to be treated as intangible asset of capital nature and

consequently the royalty payment is a capital expenditure and

the assessee is entitled for depreciation only.

(ii) Whether on the facts and in the circumstances of the

case the tribunal was right in holding the expenditure incurred

on Employee Stock Option Scheme is allowable as revenue

expenditure."

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TCA.Nos.886, 892, 893, 894 of 2017

In TCA.Nos.893 and 894 of 2017:-

"Whether on the facts and in the circumstances of the

case the Tribunal was right in holding that provisions of sec

14A rw Rr 8D cannot be invoked to compute the indirect

expenditure of Rs.13.77 Cr for earning the exempt income, for

the purpose of disallowance u/s 14A on the ground that the

assessing officer had not expressively recorded a specific

satisfaction that the said expenses were incurred to earn exempt

income."

2. However, during the course of hearing, the learned counsel appearing

for the appellant / Revenue has produced redrafted grounds / Questions of law

in TCA.Nos.893 and 894 of 2017, which have been agreed to by the learned

counsel appearing for the respondent / assessee and they are as follows:-

“(i) Whether on the facts and in the circumstances of the

case, the Tribunal was right in holding that the royalty paid by

the assessee towards the use of logo of Shriram Chits and

Investments P Ltd is to be treated as revenue expenditure

without appreciating that as per the section 32 w.e.f. 1.4.99 the

royalty is to be treated as intangible asset of capital nature and

consequently the royalty payment is a capital expenditure and

the assessee is entitled for depreciation only.

(ii) Whether on the facts and in the circumstances of the

case the tribunal was right in holding the expenditure incurred

on Employee Stock Option Scheme is allowable as revenue

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TCA.Nos.886, 892, 893, 894 of 2017

expenditure."

3. The learned counsel appearing for the appellant / Revenue further

submitted that the substantial questions of law, raised in all these appeals are