Monetary limit for filing of appeals also applies to Pending References

Brief of the Case

Bombay High Court held In the case of CIT vs. M/s. Sunny Sounds P. Ltd. that however these references are undoubtedly made by the tribunal, they emanate from an application by one of the parties before it , giving rise to the question of law requiring the opinion of the court. This in practice is similar to the statutory appeal under section 260A being filed by a party to the high court for the reason that, this appeal is not considered as a matter of right of the party but only if the court is satisfied that a substantial question of law arises and admits the appeal for further consideration. Therefore a pending appeal under section 260A is no different from a pending reference. Therefore we construe the circular 21/2015 dated 10^th Dec. 2015 defining the monetary limits to file appeals as applicable even to pending references in the same manner they apply to pending appeals. Hence the current reference application, the tax effect is less than Rs.20 lacs, the same is being returned unanswered.

Facts of the Case

Whether the Circular No. 21/2015 dated 10^th Dec. 2015 which deals with appeal including pending appeals applies to pending References having a tax effect of less than Rs. 20 lacs.

Held by High Court

High Court held that from the reading of the circular, it is clear that it does not advert to pending references. It only mention about non filing of appeal to the high court where the tax effect is less than Rs. 20 lacs and that it would apply retrospectively even in respect of pending appeals which would not be pressed. However, this Court in M/s. Computer Point (I) Ltd. Income tax reference no. 430 of 1997 decided on 24^th July, 2015 interpreting the earlier circular no. 5 dated 10^th July, 2014 issue by CBDT, has held that it would apply also to pending references. The aforesaid view was followed in Income Tax reference no. 419 of 1995 CIT vs. M/s Dempo Mining Corporation Ltd. and 214 of 1196 CIT vs. M/s Sanrit Hotel, both rendered on 24^th July, 2015. In all the above cases, pending references were returned unanswered in view of the tax effect.

High Court held that the circular dated 10^th Dec.2015 is identically worded to the instruction no. 5 dated 10^th July, 2014 save and except enhancement of the threshold limit for the purpose of revenue pursuing its appellate remedies inter alia before the high court, specifically providing for the retrospective operation of the circular so as to apply to pending appeals and directing that the pending appeals be withdrawn and not pressed. In the above view and by following the decision mentioned above, high court held that even thought the 2015 circular does not specifically refer to the references just as the instruction 5 of 2014 , it should apply even to pending references under 256.

Further however these references are undoubtedly made by the tribunal, they emanate from an application by one of the parties before it leading to the order giving rise to the question of law requiring the opinion of the court. This in practice is similar to the statutory appeal under section 260A being filed by a party to the high court for the reason that , this appeal is not considered as a matter of right of the party but only if the court is satisfied that a substantial question of law arises and admits the appeal for further consideration. Therefore a pending appeal under section 260A is no different from a pending reference. Therefore we construe the circular 21/2015 dated 10^th Dec. 2015 as applicable even to pending references in the same manner they apply to pending appeals.

There is no reason to why the circular should not apply to pending references where the tax effect is less than 20 lacs as the objective of the circular would stand fulfilled on its application even to pending references more particularly bearing in mind that there are 1149 number of references still awaiting disposal by this court and a large number of them would have tax effect of less than Rs. 20 lacs.

In the above view, high court held that in the current reference application, the tax effect is less than Rs. 20 lacs at the instance of the revenue, the same is being returned unanswered.

Accordingly reference disposed of.