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Issues involved: Challenge to Tribunal's judgment by Revenue based on tax effect of loss claimed by assessee, interpretation of CBDT circulars on monetary limits for filing appeals.
Judgment Summary: 1. The Revenue challenged the Tribunal's judgment based on the tax effect of the loss claimed by the assessee. The Tribunal dismissed the appeal, citing that the assessee had suffered a loss and the CBDT's circulars on monetary limits for filing appeals rendered the Revenue's appeal not competent. 2. The notional tax amount was higher than the limit prescribed by the Board's circular at the relevant time. 3. In a separate judgment, it was observed that the circulars did not intend to bar tax appeals even in cases where the potential tax effect would be significant, solely because the assessee had negative income. The circulars provided monetary limits for filing appeals based on tax effect, and the notional tax effect had to exceed the prescribed limits for the appeal to be presented. 4. It was clarified that the Board's instructions did not shut out further appeal in cases of return of loss automatically, irrespective of the difference in perception between the Assessing Officer and the CIT (Appeals) regarding the computation of loss. The subsequent clarifications in circulars did not amplify the position prevailing prior to such circulars. 5. The common question framed in all appeals was answered in favor of the Revenue, stating that the Revenue's appeal would not be barred by the Board's circular under Section 268A of the Act solely because the income of the assessee was negative. The notional tax effect had to be above the limits prescribed by the Board for presentation of such appeals. 6. The Tax Appeal was allowed, the Tribunal's judgment was quashed, and the proceedings were remanded to the Tribunal for consideration of the appeal on merits.
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