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2015 (5) TMI 265 - HC - Income TaxRevenue Audit Objection - Maintainability of appeal - Whether it is proper for the Tribunal to dismiss the appeal of the department without going into the merits of the case on the ground of low monetary limit especially when there was a revenue audit objection? - Tribunal dismiss the appeal of the department on the ground that CBDT Circular No.3 of 2011 dated 9.2.2011 in paragraph 8 clearly mention the exception which was not considered while dismissing the appeal - Held that - There is no document relating to Revenue Audit Objection available in the typed set of documents filed along with this appeal. It is also evident from the order passed by the Tribunal that there is no reference to any document filed by the Department, before the Tribunal, insofar as Revenue Audit Objection in relation to the said transaction is concerned. In such view of the matter, this Court is in agreement with the view taken by the Tribunal that CBDT Circular 3/2011 dated 9.2.2011 will come into play and, therefore, the dismissal of the appeal is entirely justified. No substantial questions of law arise for consideration in this appeal. - Decided against revenue.
Issues:
1) Dismissal of appeal by Tribunal without considering merits on grounds of monetary limit and Revenue Audit Objection. 2) Dismissal of appeal by Tribunal based on CBDT Circular No.3 of 2011. 3) Allowability of excess sitting fee paid to Director under Companies Act. 4) Interpretation of Companies Act regarding limits on remuneration. 5) Inclusion of Director's sitting fee in remuneration under Schedule XIII of Companies Act. Issue 1: The Revenue appealed against the Tribunal's order dismissing their appeal without assessing the case's merits due to a low monetary limit and a Revenue Audit Objection. The Assessing Officer found the company had paid excess remuneration, including sitting fees, which was added to income. The CIT (Appeals) allowed the appeal, deleting the addition. The Tribunal held that even if the reopening was valid, the tax effect was below the limit specified in CBDT Circular No.3 of 2008, making the appeal not maintainable. Issue 2: The Tribunal dismissed the appeal based on CBDT Circular No.3 of 2011, which specified that adverse judgments should be contested on merits if certain criteria are met, including Revenue Audit Objection. The Revenue argued that the case fell under sub-clause (c) of clause 8 of the Circular due to a Revenue Audit Objection. However, the Court found no evidence of such objection in the documents and agreed with the Tribunal's decision to dismiss the appeal based on the Circular. Issue 3: The question arose regarding the allowance of excess sitting fee paid to the Director under the Companies Act. The Assessing Officer added the sitting fee to income, but the CIT (Appeals) deleted this addition. The Court did not find any substantial legal questions in this regard and upheld the Tribunal's decision to dismiss the appeal. Issue 4: The interpretation of the Companies Act concerning limits on remuneration was discussed. The Revenue contended that the remuneration should be as per Section 198 read with Section 309 and Schedule XIII of the Act. However, the Court did not find any legal issues warranting interference with the Tribunal's decision. Issue 5: The issue of whether the Director's sitting fee is included in the remuneration defined under Schedule XIII of the Companies Act was raised. The Court did not find any substantial legal questions in this matter and upheld the Tribunal's decision to dismiss the appeal.
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