PRINCIPAL COMMISSIONER OF vs. M/S.MAYA APPLIANCES PVT.LTD.,

TCA/417/2017HC Madras29 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The dismissal was based on the Revenue's submission that the appeals were not being pursued due to a low tax effect, falling below the threshold limit stipulated in CBDT Circular No.17/2019. This circular increased the monetary limit for filing or pursuing appeals before the High Court to Rs. 1 Crore. The Court noted that the tax effect in these cases was less than this limit. Consequently, the appeals were dismissed on this procedural ground. The substantial question of law framed at the time of admission was explicitly left open by the Court. The Revenue was granted liberty to seek restoration of the appeals if the tax effect was found to be above the threshold limit, to be heard and decided on merits. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed three appeals (T.C.A.Nos.417 to 419 of 2017) against the common order dated 09.09.2016 passed by the Income Tax Appellate Tribunal (ITAT) 'A' Bench, Chennai. These appeals pertained to assessment years 2006-07, 2008-09, and 2009-10. The appeals were admitted by the High Court on 16.08.2017, based on a substantial question of law concerning the levy of fringe benefit tax. The assessee is M/s. Maya Appliances Pvt Ltd. The dispute revolves around whether fringe benefit tax was warranted on expenses incurred on dealers who were not employees.

What were the issues?

1. Whether, in the facts and circumstances of the case and in law, the learned Tribunal was right and justified in holding that levy of fringe benefit tax is not warranted in the case of the assessee since expenses were incurred only on the 'dealers' of the assessee, who are not the employees of the assessee and thus ignoring the provisions of Section 115WB(2) of the Income Tax Act, 1961 on deemed fringe benefits? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The issue was framed based on the Tribunal's order which held that fringe benefit tax was not warranted as expenses were incurred on dealers, not employees, thereby ignoring Section 115WB(2). Revenue's Contention: The Revenue's primary submission was that the appeals were not being pursued due to low tax effect, citing CBDT Circular No.17/2019 which increased the monetary limit for appeals to the High Court to Rs. 1 Crore. The tax effect in these cases was stated to be below this threshold.

Which sections of the Income-tax Act were involved?

Section 115WB(2),Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.Nos.417 to 419 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.08.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.417 to 419 of 2017 Principal Commissioner of Income Tax 4, No.121, Mahatma Gandhi Road, Chennai-600 034. .. Appellant in all Appeals -vs- M/s.Maya Appliances Pvt Ltd., 2, Boat Club I Avenue, Raja Annamalaipuram, Chennai-600 028. PAN: AAA CM 6280D .. Respondent in all Appeals Appeals under Section 260A of the Income-tax Act, 1961, against the common order dated 09.09.2016, made in I.T.A.Nos.2320, 2321 & 2322/Mds/2015 on the file of the Income Tax Appellate Tribunal 'A' Bench, Chennai for the assessment years 2006-07, 2008-09 and 2009-10 respectively. For Appellant : Mr.T.R.Senthil Kumar, (In all Appeals) Senior Standing Counsel : assisted by Ms.K.G.Usharani, Standing Counsel For Respondent : Mr.R.Venkatanarayana, (In all Appeals) For M/s.Subbaraya Aiyar, Padmanabhan & Ramamani ****** 1/4 http://www.judis.nic.in T.C.A.Nos.417 to 419 of 2017 COMMON JUDGMENT (Delivered by T.S.Sivagnanam, J.) These appeals filed by the Revenue under Section 260A of the Income- tax Act, 1961 are directed against the common order dated 09.09.2016, made in I.T.A.Nos.2320, 2321 & 2322/Mds/2015 on the file of the Income Tax Appellate Tribunal 'A' Bench, Chennai for the assessment years 2006-07, 2008-09 and 2009-10 respectively. 2.The appeals were admitted on 16.08.2017, on the following substantial question of law:- “Whether in the facts and circumstances of the case and in law, the learned Tribunal was right and justified in holding that levy of fringe benefit tax is not warranted in the case of the assessee since expenses were incurred only on the 'dealers' of the assessee, who are not the employees of the assessee and thus ignoring the provisions of Section 115WB(2) of the Income Tax Act, 1961 on deemed fringe benefits?” 3.Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel assisted by Ms.K.G.Usharani, learned Standing Counsel for the appellant – and Mr.R.Venkatanarayana, learned counsel, for M/s.Subbaraya Aiyar, Padmanabhan & Ramamani, for the respondent. 2/4 http://www.judis.nic.in T.C.A.Nos.417 to 419 of 2017 4.The learned Senior Standing Counsel for the appellant submits that the above appeals are not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019, dated 08.08.2019 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 these cases is less than the threshold limit. 5.In the light of the said submissions, the above tax case appeals are dismissed on account of the low tax effect. The substantial question of law framed is 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 make a mention to this Court to restore the appeals to be heard and decided on merits. No costs. (T.S.S., J.) (V.B.S., J.) 29.08.2019 Index : Yes/No Speaking/Non-Speaking Order abr 3/4 http://www.judis.nic.in T.C.A.Nos.417 to 419 of 2017 T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. (abr) To 1.M/s.Maya Appliances Pvt Ltd., 2, Boat Club I Avenue, Raja Annamalaipuram, Chennai-600 028. 2.The Income Tax Appellate Tribunal 'A' Bench, Chennai. T.C.A.Nos.417 to 419 of 2017 29.08.2019 4/4 http://www.judis.nic.in

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