THE COMMISSIONER OF INCOME T vs. M/S.SUNDARAM ASSET MANAGEMEN

T.C.A.No.198 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.198 of 2021 The Commissioner of Income Tax, Chennai. ... Appellant

Versus M/s. Sundaram Asset Management Company Limited (formerly Sundaram BNP Paribas Asset Management Co Ltd) Sundaram Towers, II floor, No.46, Whites Road, Chennai - 600 034. PAN: AAICS 4257J ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order dated 03.10.2019 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.466/Chny/2018. For Appellant : Mr.T.Ravikumar Standing Counsel For Respondent : Mr.P.Sridharan Page 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.198 of 2021 JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 03.10.2019 passed by the Income Tax Appellate Tribunal, “D” Bench, Chennai, in I.T.A.No.466/Chny/2018, relating to the assessment year 2012-13.

2.By order dated 22.03.2021, this court admitted the aforesaid tax case appeal on the following substantial questions of law: “(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the Assessing Officer to recompute the disallowance made under Section 14A to the extent of the investment, which yielded exempted income during the year under consideration is contrary to the intention of the legislature? (ii) Whether the reasoning and finding of the Tribunal is proper while directing the AO to recompute the disallowance of expenses relating to earning of exempt income for computation of book profit under Clause (f) of Explanation (1) to Section 115JB(2) of the Income Tax Act without resorting to computation as contemplated under section 14A r.w Rule 8D as per the decision of the Special Bench in the case of Vireet Investments P Ltd? Page 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.198 of 2021 (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that disallowance could not be made under Section 40(a)(ia) on account of payment made towards brokerage made to mutual funds distributors? (iv) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance made under section 40(a)(i) towards the payments made to M/s. Fund Quest without deducting TDS is to be allowed especially when the services rendered are only in the nature of royalty payment? (v) Is not the finding of the Tribunal wrong, especially when Fund quest had done elaborate market research on investment portfolio, who had developed the date for investment with less risk in order to get maximum returns and therefore was a value added product prepared on the basis of experience and the commercial information provided is to be considered only as royalty payment as per the provision of Section 9(1)(vii) of the Income Tax Act and also as per Article 13 of the Indo French Double Taxation Avoidance Agreement and therefore taxable? (vi) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance made under section 40(a)(i) towards payments made to BNP Paribas Investment, Singapore without effecting TDS was proper despite the fact that the payments made were for managerial fees falling under the provisions of Section 9(1) (vii) of the Income Tax Act, 1961 and is, therefore, liable to be taxed?" Page 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.198 of 2021 3.When the matter was 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 this appeal is less than the threshold limit. 4.In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 23.08.2022

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Index : Yes / No av Page 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.198 of 2021 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av To 1. The Income Tax Appellate Tribunal, “D” Bench, Chennai. 2. The Commissioner of Income Tax, Chennai. 3. The Deputy Commissioner of Income-tax, Large Tax Payer Unit - 1, Chennai. 4. The Commissioner of Income Tax (Appeals)- 17, Chennai. T.C.A.No.198 of 2021 23.08.2022 Page 5/5 https://www.mhc.tn.gov.in/judis