THE COMMISSIONER OF INCOME T vs. M/S.FINANCIAL SOFTWARE AND S

TCA.No.420 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.8.2021 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP Tax Case Appeal No.420 of 2021

The Commissioner of Income Tax, Chennai ...Appellant Vs M/s.Financial Software and Systems (P) Ltd., Chennai-103. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 22.6.2016 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai made in I.T.A.No.824/Mds/2016 for the assessment year 2010-11. For Appellant: Mr.Karthik Ranganathan, SSC For Respondent : Mr.N.V.Balaji Judgment was delivered by

T.S.SIVAGNANAM

This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order 1/4 https://www.mhc.tn.gov.in/judis/ TCA.No.420 of 2021 dated 22.6.2016 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai (the Tribunal for brevity) made in I.T.A.No.824/ Mds/2016 for the assessment year 2010-11. 2. The Revenue has filed this appeal by raising the following substantial questions of law: “1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the proceeding under Section 201(1) holding the assessee in default was not applicable to foreign remittance made towards purchase of software without effecting withholding tax under Section 195 is proper ? 2. Whether the foreign remittance made to companies by the assessee without deducting withholding taxes under Section 195 of the Income Tax Act, 1961 in respect of purchase of software can be treated as royalty on which TDS is to be made ? And 3. Whether the disallowance made under Section 40(a)(i) and the order passed under Section 201(1)/201(1A) are independent and different proceeding?” 3. We have heard Mr.Karthik Ranganathan, learned Senior Standing Counsel appearing for the appellant/Revenue and Mr.N.V. Balaji, learned counsel accepting notice for the respondent/assessee. 2/4 https://www.mhc.tn.gov.in/judis/ TCA.No.420 of 2021 4. The learned Senior Standing Counsel for the appellant submits that the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law raised are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to file a petition before this Court to restore the appeal to be heard and decided on merits. No costs. 05.8.2021 To The Income Tax Appellate Tribunal, 'A' Bench, Chennai. RS 3/4 https://www.mhc.tn.gov.in/judis/ TCA.No.420 of 2021 T.S.SIVAGNANAM,J AND SATHI KUMAR SUKUMARA KURUP,J RS TCA.No.420 of 2021 05.8.2021 4/4 https://www.mhc.tn.gov.in/judis/