The Commissioner Of Income Tax, Chennai v. M/S.sundaram Asset Management Co. Ltd

In the High Court of Judicature at MadrasDated : 17.06.2020 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMandThe Honourable Mrs.Justice PUSHPA SATHYANARAYANA Tax Case Appeal Nos.58 & 59 of 2015 The Commissioner of Income tax,Chennai. ...Appellant in both the AppealsVs M/s.Sundaram Asset Management Co. Ltd.,No.46, Whites Road,Royapettah, Chennai-600 014....Respondent in both the Appeals Prayer: APPEALS Tax Case filed under Section 260A of the IncomeTax Act, 1961 against the order dated 22.08.2014 made inI.T.A.Nos.1241 & 1154/Mds/2014 on the file of the Income TaxAppellate Tribunal 'D' Bench, Chennai for the assessment years2009-10 and 2010-11, and against the order of the Commissionerof Income Tax, LTU (Appeals),Anna Nagar Western extension,chennai-600 101, dated 24.01.2014, made in ITA.Nos.73/11-12/LTU(A) and 45/12-13/LTU(A),respectively for the assessment year2009-10 and 2010-11 and against the order of the DeputyCommissioner of Income tax (Appeal), Chennai, dated 27/12/2011and 15/02/2013, made in GI No.PA No.AAICSJ respectively for theassessment year 2009-10 and 2010-11. For Appellant : Mr.T.Ravikumar, (In both TCAs) Senior Standing Counsel & Ms.R.Hemalatha, Senior Standing CounselRespondent : Mr.R.Viayaraghavan(In both TCAs) For M/s.Subbaraya Aiyar, Padmanabhan & Ramamani Common Judgment was delivered by T.S.Sivagnanam,J.We have heard Mr.T.Ravikumar, learned Senior StandingCounsel,appearingfortheappellant–RevenueandMr.R.Vijayaraghavan, learned counsel for the respondent-assessee. https://hcservices.ecourts.gov.in/hcservices/ 2. These appeals, filed by the Revenue under Section 260A ofthe Income Tax Act, 1961 are directed against the order orderdated 22.08.2014 made in I.T.A.Nos.1241 & 1154/Mds/2014 on thefile of the Income Tax Appellate Tribunal 'D' Bench, Chennai forthe assessment years 2009-10 and 2010-11. 3. The appeals were admitted on 10.03.2015 on the followingsubstantial questions of law : T.C.(A) No.58 of 2015:- “i) Whether on the facts and circumstances ofthe case, the Tribunal was right in confirming theorder of the CIT(A) who deleted the disallowancemade under Section 40(a)(i) of the Income Tax Actholding that the payment made by the assessee toM/s.Fund Quest was not in the nature of royalty andtherefore no TDS was to be deducted on the paymentsmade? ii) Is not the finding of the Tribunal wrongespecially when Fund Quest had done elaboratemarket research on investment Portfolio who haddeveloped the data for investment with less riskand to get maximum return which is a value addedproduct prepared on the basis of experience and thecommercial information provided by them is to beconsidered as royalty as per the provisions ofSection 9(1)(vi) of the Income Tax Act and also asper Article 13 of the Indo French Double TaxationAvoidance Agreement? iii) Whether the Tribunal was right in holdingthat the repairs of the leasehold premisesamounting to Rs.17,20,406/- is to be treated onlyas revenue expenditure especially when the assesseehas incurred the expenditure which are in thenature of capital expenditure as per Explanation 1to Section 32(1)(ii) of the Income Tax Act? T.C.(A) No.59 of 2015:- i) Whether on the facts and circumstances of thecase, the Tribunal was right in confirming theorder of the CIT(A) who deleted the disallowancemade under Section 40(a)(i) of the Income Tax Actholding that the payment made by the assessee toM/s.Fund Quest was not in the nature of royalty andtherefore no TDS was to be deducted on the paymentsmade? ii) Is not the finding of the Tribunal wrongespecially when Fund Quest had done elaboratemarket research on investment Portfolio who haddeveloped the data for investment with less riskand to get maximum return which is a value addedproduct prepared by them is to be considered as T.C.(A) No.59 of 2015:- i) Whether on the facts and circumstances of thecase, the Tribunal was right in confirming theorder of the CIT(A) who deleted the disallowancemade under Section 40(a)(i) of the Income Tax Actholding that the payment made by the assessee toM/s.Fund Quest was not in the nature of royalty andtherefore no TDS was to be deducted on the paymentsmade? ii) Is not the finding of the Tribunal wrongespecially when Fund Quest had done elaboratemarket research on investment Portfolio who haddeveloped the data for investment with less riskand to get maximum return which is a value addedproduct prepared by them is to be considered as royalty as per the provisions of Section 9(1)(vi)of the Income Tax Act and also as per Article 13 ofthe Indo French Double Taxation Avoidance Agreement?iii) Whether the Tribunal was right in holdingthat the repairs of the leasehold premisesamounting to Rs.16,81,348/- is to be treated onlyas revenue expenditure especially when the assesseehas incurred the expenditure which are in thenature of capital expenditure as per Explanation 1to Section 32(1)(ii) of the Income Tax Act?” 4. The learned Senior Standing Counsel for the appellantsubmits that the above appeals are not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019dated 08.8.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 5. In the light of the said submissions, the above tax caseappeals are dismissed on account of the low tax effect. Thesubstantial questions of law framed are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeals to be heard and decided onmerits. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar abr To 1.The Income Tax Appellate Tribunal 'D' Bench, Chennai.2.The Commissioner of Income Tax(Appeal), II Floor, 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar western Extension, Chennai-101. 3.The Deputy Commissioner of Income Tax, Large Tax Payer Unit, Chennai. MR(CO)RMP(07/10/2020)