INCOME TAX OFFICER, CORPORATE WARD -3(1), CHENNAI, CHENNAI V. TSL TECHNO SERVICES LIMITED(TTK HEALTHCARE LIMITED ), CHENNAI

ITA 1873/CHNY/2024

AI Insights

The case involves two appeals by the Revenue against TSL Techno Services Limited (TTK Healthcare Pvt. Ltd.) for the Assessment Years 2017-18 and 2018-19. The appeals were against the orders of the CIT(A) which had deleted the disallowances made by the A.O on logo charges and depot service charges. The A.O had initially disallowed these charges citing they were capital in nature and excessive compared to what was paid to other parties. The CIT(A) reversed these disallowances, relying on earlier ITAT decisions favoring the assessee. The Revenue challenged these decisions, leading to the current appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107047 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: ITA Nos.1826 to 1830/Mds/2011 & 2077/Mds/2011, ITA No.1459,1460 & 1461/Chny/2024, ITA No 1772/Chny/2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G. SARATHA
• Assessee Lawyers: R. VIJARAGHAVAN
• Keywords: Set aside; Revised return
• Section: 260A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0019ी एबी टी. वक\u001e, \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम( BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.1490 & 1873/Chny/2024 िनधा>रण वष> /Assessment Years: 2017-18 & 2018-19 The Income Tax Officer, Ward-3(1), Chennai. Vs. TSL Techno Services Limited (TTK Healthcare Pvt. Ltd.), No.6, Cathedral Road, Gopalapuram, Chennai – 600 086. [PAN: AABCT 3312J] (अपीलाथ\u0007/Appellant) (\b\tयथ\u0007/Respondent) अपीलाथ\u001e की ओर से/ Assessee by : Shri R. Vijaraghavan, Advocate JKथ\u001e की ओर से /Revenue by : Mrs. G. Saratha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 21.11.2024 घोषणा की तारीख /Date of Pronouncement : 14 .02.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid two appeals filed by the Revenue for Assessment Years (AYs) 2017-18 & 2018-19 arising out of the identical orders of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 22.02.2024 & 27.05.2024. ITA Nos.1490 & 1873/Chny/2024 :- 2 -: 2. There is a delay of 25 days in filing the appeal by the Revenue in ITA No.1490/Chny/2024 for A.Y 2017-18. The Revenue has filed affidavit stating the reasons for delay in filing the appeal. We have considered the petition of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is condoned accordingly. 3. The facts in both the appeals of the Revenue are identical and issues are common hence, we proceed to pass a common order. For brevity, we shall take up the appeal in ITA No.1490/Chny/2024 for A.Y 2017-18 as lead case. The grounds of appeal raised by the assessee for A.Y 2017-18 are as under: “1. The order of the CIT (A) is contrary to the facts and circumstances of the case. 2. The Id. CIT (A) erred in deleting the addition made by the AO towards logo charges by relying upon the order of the Hon'ble ITAT Chennai in assessee's own case wherein the ITAT allowed the logo charges expenses as revenue expenses in earlier years. 2.1 The Id. CIT (A) failed to appreciate the fact that relied upon the order of the Hon'ble ITAT Chennai in assessee's own case wherein the ITAT allowed the logo charges expenses as revenue expenses in earlier years was not accepted by the revenue & further appeal u/s 260A was filed before the Hon'ble High Court. 3. The Id. CIT (A) erred in deleting the disallowance made by the AO towards Depot Service charges by relying upon the order of the ITA Nos.1490 & 1873/Chny/2024 :- 3 -: Hon'ble ITAT Chennai in assessee's own case wherein the ITAT allowed the appeal of the assesse in earlier years. 3.1 The Id. CIT (A) failed to appreciate the fact that relied upon the order of the Hon'ble ITAT Chennai in assessee's own case wherein the ITAT deleted the disallowance made towards depot service charges in earlier years was not accepted by the revenue & further appeal u/s 260A was filed before the Hon'ble High Court 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer be restored.” 4. The brief facts of the case are that the assessee-company has filed its return of income on 31.10.2017 declaring total income of Rs.28,91,60,480/-. Subsequently, consequent upon amalgamation of assessee-company and M/s. TSL Techno Services Ltd. with M/s. TTK Healthcare Ltd., the assessee-company revised return of income. The A.O reopened the assessment and made disallowance of Logo charges of Rs. 2,87,96,231/- paid to its group concern M/s. T.T.Kishnamachari & Co for using TTK monogram , as such charges were not paid by other sister concern for using the monogram and also because such expenditure is capital in nature. The AO also made disallowances of Depo Service Charges of Rs.3,51,75,642 , @1% of sale made through sister concern M/s. TTK & Co. as the assessee has paid Depo. Charges @ 3% on sales effected by M/s. TTK & Co. compared to depo charge @ 2% paid to other parties invoking the provisions of Section 40(A)(2) of the Act. Aggrieved, the assessee has ITA Nos.1490 & 1873/Chny/2024 :- 4 -: filed appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) allowed the appeal on both the issues, relying on the order of ITAT, Chennai in assessee’s case in earlier years. Now, the Revenue is in appeal on the ground that the Department has preferred appeal before the Hon’ble High Court. 5. The Ld. Departmental Representative (DR) has argued that the assessee has paid 0.5% of the sale made to M/s. T.T.Kishnamachari & Co. for using the monogram entitled “TTK” for its image and identity in the public minds relating to the quality of the products and other services as well as restructure of the organization. The A.O disallowed the above charges u/s. 40(A)(2)(b) of the Act as M/s. TTK & Co. is part of the same group and such charges had not been paid by other group concerns for logo charges. The Ld. DR has argued that logo charges paid is capital in nature . As regard to Depo. Services, the Ld. DR has argued that the assessee has paid excessive amount for Depo charges to M/s. TTK and Co and therefore, the A.O was justified to make the disallowance u/s. 40(A)(2) of the Act. 6. The Ld. Authorized Representative (A.R) of the assessee, on the other hand, supported the order of Ld. CIT(A) and argued that the ITA Nos.1490 & 1873/Chny/2024 :- 5 -: issue is squarely covered in favour of the assessee by the order of Hon’ble ITAT, Chennai in ITA Nos.1826 to 1830/Mds/2011 & 2077/Mds/2011 dated 31.10.2011 and these orders are not stayed by Hon’ble High Court. Therefore, the Ld. CIT(A) was bound by decision of Hon’ble ITAT . 7. We have heard the rival submissions, and perused the materials available on record. We find that both the issues in appeal are covered by the tribunal’s decision in assessee’s own case in ITA No1459,1460 & 1461/Chny/2024 for the A.Y 2013-14, 2014-15& 2016- 17. The Tribunal has followed the same in A.Y 2020-21 in ITA No 1772/Chny/2024 in the order dated 25.10.2024. As the Ld CIT(A) has allowed assessee’s appeal following the decision of tribunal in earlier years, we do not find any infirmity in the order of Ld. CIT(A) deleting the disallowances of depo service charges and logo charges expenses made by the A.O . In view of the above, the appeal in ITA No.1490/Chny/2024 for A.Y 2017-18 is dismissed. 8. We find that the identical issue of disallowances of logo charges is involved in Revenue’s appeal for A.Ys 2018-19 also and accordingly, our adjudication above in A.Y 2017-18 is mutatis ITA Nos.1490 & 1873/Chny/2024 :- 6 -: mutandis applies therein also. Therefore, for the similar reasons, we dismiss the appeal in ITA No.1873/Chny/2024 as well. 8. In the result, both the appeals filed by the Revenue are dismissed. Order pronounced on 14th February, 2025. Sd/- Sd/- (एबी टी. वक\u001e) (ABY. T. Varkey) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा सद! /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 14th February, 2025. EDN/- आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. \t थ\b/Respondent 3. आयकर आयु\u0010/CIT, Coimbatore 4. िवभागीय \tितिनिध/DR 5. गाड\u0019 फाईल/GF "