CBDT Circular on Monetary Limits Not Applicable to DTAA Objections

CIT (International Taxation)-2 Perfetti Van Melle Vs ICT BV(Panjab Haryana high court)

The Punjab and Haryana High Court dismissed the appeal filed by CIT (International Taxation)-2 against Perfetti Van Melle ICT BV and held that CBDT Circular No. 9/2024, which sets monetary limits for filing appeals, is not applicable to cases involving international taxation. Taxation under Double Taxation Avoidance Agreements (DTAA). The Revenue Administration argued that the monetary limit limitation is not valid and that the objection is based on Article 3.1 of Circular No. 5/2024. He argued that it fell within the scope of the exception specified in paragraph 1. However, the Court referred to the decision of the Supreme Court. Engineering Analysis Center of Excellence Pvt. Ltd. and CIT (2022) resolved relevant questions regarding the applicability of the DTAA. A petition for review was filed against this Supreme Court decision and was later dismissed for delay and lack of merit. The court agreed with the defendant’s lawyer that the current case did not fall within the exceptions listed in the circular; as these exceptions primarily related to domestic and international TDS/TCS disputes rather than broader DTAA-related issues. Since there were no unresolved legal issues and the Supreme Court’s position was already clear, the Court rejected the objection, concluding that the extension of the trial was not justified. All applications for rejection of the case were also eliminated.

FULL TEXT OF THE PENJAB AND HARYANA HIGH COURT DECISION/ORDER

1. Learned counsel for the Revenue Department vehemently argued that the case does not fall within the ambit of Circular No. 9/2024 dated 17.09.2 024 issued by the Central Board of Direct Taxes on monetary limit basis. It falls within the scope of exception in accordance with Article 3.1 of Circular No. 5/2024 dated 15.03.2024.

2. Learned counsel has directed this Court to clause l(ii) of paragraph 3.1. Circular No. 5/2024 Submission of the issue in the current case to the Double Taxation Prevention Authority, subject to exceptions.

3. On a sharp question put by the Court on the matter finally decided by the Court Supreme Court Engineering Analysis Center of Excellence Private Limited and Income Tax & Research. Commissioner, reported in (2022) 3 SCC 321.It has been submitted by the learned counsel that the review petition regarding the said decision has been filed.

4. Learned counsel appearing for the respondent accepted the order passed in the review petition, thus the review petitions and I’s on circulation are dismissed on account of both delay and the order on merits dated 23.04.2024.

5. We evaluated the applications.

6. First of all, we accept the argument advanced by the learned counsel on behalf of the respondent that the case does not fall within the exception of clause l(ii) of paragraph 3.1 which relates only to cases arising out of disputes relating to TDS/TCS. Matters related to tax duties, both national and international, where they relate to the applicability of the provisions of the Agreement. Otherwise, the legal questions raised by the appellant in the present case have been adequately answered by the Supreme Court. Engineering Analysis (above).

7. Since the review petitions have already been dismissed, we see no reason to keep this case pending for decision.

8. The appeal is accordingly dismissed.

9. All pending applications will also be destroyed.