2012 (2) TMI 561 - AT - Income Tax

Summary

Issues Involved: Appeal against CIT(A) order for assessment year 2008-09, Department's grounds challenging exemption under section 10(10C) of IT Act, Compliance with Rule 2BA of IT Rules, 1962, Tax effect below prescribed limit for filing appeal.

Exemption under Section 10(10C) of IT Act:
The department raised concerns regarding the CIT(A) ignoring the e-circular on the "EXIT OPTION" Scheme by the State Bank of India, which clarified that no exemption of ex-gratia from income tax u/s. 10(10C) of the IT Act was intended in that scheme. Additionally, the CIT(A) was criticized for allowing the appeal despite instructions stating that employees availing of the Exit Option Schemes are not eligible for deduction under section 10(10C) of the Income Tax Act, 1961. However, it was noted that the tax effect in this appeal was below the prescribed limit for filing an appeal set by the CBDT, leading to the dismissal of the appeal by the department.

Compliance with Rule 2BA of IT Rules, 1962:
The CIT(A) was accused of presuming that the requirements of Rule 2BA of the IT Rules, 1962 had been met, without proper verification. This issue was raised by the department as a ground for appeal, indicating a lack of compliance with the specific rules governing the assessment process.

Tax Effect Below Prescribed Limit for Filing Appeal:
Despite the department's insistence on deciding the issue raised on its merits, it was highlighted that the tax effect in this departmental appeal was less than the prescribed limit set by the CBDT for not filing an appeal. The CBDT instructions emphasized that appeals below this threshold should not be pursued, as per the provisions of section 268A inserted by the Finance Act, 2008. The Board's instructions are binding on income-tax authorities, and in this case, the appeal was dismissed due to the tax effect being below the specified limit.

In conclusion, the appeal by the department against the CIT(A) order for the assessment year 2008-09 was dismissed based on the grounds related to exemption under section 10(10C) of the IT Act, compliance with Rule 2BA of IT Rules, 1962, and the tax effect falling below the prescribed limit for filing an appeal. The decision was in accordance with the provisions of section 268A and the CBDT instructions, emphasizing the importance of adhering to prescribed limits for filing appeals in income tax cases.