COMMISSIONER OF INCOME TAX vs. M/S. WEST ASIA MARITIME LTD.,

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TCA/384/2018HC Madras30 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn. The dismissal was based on the submission by the Revenue's counsel that the tax effect in the appeal was less than the monetary limit prescribed by CBDT Circular No. 17/2019, which mandates that appeals shall not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. Therefore, no decision was made on the merits of the substantial questions of law regarding the applicability of Section 195 and the accrual of income under Section 9(1)(i) read with Section 5(2)(b). No costs were awarded. The connected miscellaneous petition was also closed.

What were the facts?

The Revenue, Commissioner of Income Tax, Corporate Circle - 3 (3), Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 08.09.2017 passed by the Income Tax Appellate Tribunal, “B” Bench, Chennai. The appeal pertained to assessment year 2005-06 and concerned M/s. West Asia Maritime Limited. The dispute involved the taxability of brokerage paid by the assessee to non-resident companies for the sale of a ship registered in India. The High Court was informed by the Revenue that the tax effect in the appeal was below the threshold limit of Rs. 1,00,00,000/- stipulated in CBDT Circular No. 17/2019.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was right in holding that the brokerage paid by the assessee company to non-resident companies for the sale of a ship registered in India is not covered by Section 195 of the Income Tax Act? 2. Whether the Tribunal was right in holding that Tax Deducted at Source (TDS) is to be made when the brokerage on the sale of a ship registered in India paid to a non-resident company accrues or arises in India as per Section 9(1)(i) read with Section 5(2)(b) of the Income Tax Act? The Revenue contended that the Tribunal erred in its findings regarding the applicability of Section 195 and the accrual of income in India under Section 9(1)(i) read with Section 5(2)(b). The judgment does not record specific arguments from the assessee, but their position would be in opposition to the Revenue's contentions, likely supporting the Tribunal's order. The Revenue relied on CBDT Circular No. 17/2019.

Which sections of the Income-tax Act were involved?

Section 260A,Section 195,Section 9(1)(i),Section 5(2)(b)

AI-generated summary — verify with the full judgment below

T.C.A.No.384 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.384 of 2018 and CMP.No.8273 of 2018 Commissioner of Income Tax, Corporate Circle - 3 (3), Chennai. ... Appellant Versus M/s. West Asia Maritime Limited, 6th Floor, Buhari Towers, 4, Moores Road, Chennai 600 006. PAN: AAACW 1023 E ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order dated 08.09.2017 passed by the Income Tax Appellate Tribunal, “B” Bench, Chennai, in I.T.A.No.1545/MDS/2014.

For Appellant : Mr.M.Swaminathan, Senior Standing Counsel Mrs.V.Pushpa, Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.384 of 2018 Standing Counsel For Respondent : Mr.G.Baskar

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 08.09.2017 passed by the Income Tax Appellate Tribunal, “B” Bench, Chennai, in I.T.A.No.1545/Mds/2014, relating to the assessment year 2005-06, by raising the following substantial questions of law: “(i) Whether the Tribunal was right in holding that the brokerage paid by the assessee company to the non resident companies for sale of ship registered in India is not by provision of Section 195 of the Income Tax Act? (ii) Whether the Tribunal was right in holding that TDS is to made when the brokerage on sale of ship registered in India paid to non resident company is accrued or arised in India as per Section 9(1)(i) read with section 5 (2) (b) of the Income Tax Act? " 2.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 Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.384 of 2018 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. 3.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. Consequently, connected miscellaneous petition is closed. (R.M.D., J.) (M.S.Q., J.) 30.08.2022

Internet : Yes

Index : Yes / No av Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.384 of 2018 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av To 1. The Income Tax Appellate Tribunal, “B” Bench, Chennai. 2. The Commissioner of Income Tax, Corporate Circle - 3 (3), Chennai. 3. The Assistant Commissioner of Income Tax, Company Circle III(3), New Block, 4th Floor, 121, Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034. 4. The Commissioner of Income Tax (Appeals)-III, Chennai.

T.C.A.No.384 of 2018 30.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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