2011 (9) TMI 1151 - AT - Income Tax

Monetary limit - maintainability of appeal - Circular No.5 of 2008 dated 15.5.2008 of CBDT applicability - Held that - It is clear that tax, as per the definition, would include super-tax and also fringe benefit tax but not surcharge. Admittedly, here, the tax was only ₹ 2,90,250/- which is below the limit of ₹ 3 lakhs prescribed in the Circular for filing appeals before this Tribunal. Resultantly, we do not find any mistake in the order of this Tribunal much less any mistake apparent on record. Miscellaneous Petition filed by the Revenue stands dismissed.

Summary

Issues:
1. Tax effect exceeding prescribed limit under Circular No.5 of 2008.
2. Interpretation of tax effect including surcharge.
3. Definition of "tax" under Section 2(43) of the Income-tax Act, 1961.

Analysis:
1. The Appellate Tribunal dealt with a Miscellaneous Petition filed by the Revenue, challenging the dismissal of their appeal due to the tax effect exceeding the prescribed limit of Rs. 3 lakhs as per Circular No.5 of 2008. The Tribunal noted that the additions deleted by the CIT(Appeals) amounted to Rs. 9,67,500, which surpassed the limit. The Revenue argued that the tax effect should be calculated at Rs. 3,19,277 based on a 30% tax slab with a surcharge of 10%. However, the Tribunal found no error in its previous decision, as the tax effect was below the prescribed limit, leading to the dismissal of the Revenue's petition.

2. The Tribunal delved into the definition of "tax effect" as per Instruction No.5 of 2008 dated 15th May, 2008 of CBDT, which defines it as the difference between the tax assessed and the tax that would be chargeable if the income relating to the disputed issue were reduced. The definition did not explicitly include surcharge. Further analysis of the definition of "tax" under Section 2(43) of the Income-tax Act, 1961, revealed that tax encompasses super-tax and fringe benefit tax but not surcharge. Since the tax amount in question did not exceed the prescribed limit even when considering the surcharge, the Tribunal upheld its decision to dismiss the Revenue's appeal.

3. The Tribunal's detailed examination of the legal definitions and provisions surrounding tax effect and surcharge highlighted that the tax amount, including the surcharge, did not surpass the limit set by Circular No.5 of 2008. By emphasizing the specific components included in the definition of "tax" under the Income-tax Act, 1961, the Tribunal reinforced its conclusion that the appeal dismissal was justified. Consequently, the Miscellaneous Petition filed by the Revenue was dismissed, affirming the Tribunal's original decision based on a thorough analysis of the tax effect and relevant legal definitions.

Conclusion:
The judgment by the Appellate Tribunal ITAT CHENNAI upheld the dismissal of the Revenue's appeal based on a comprehensive analysis of the tax effect exceeding the prescribed limit under Circular No.5 of 2008. The Tribunal's interpretation of the tax effect, including the absence of surcharge in the calculation, and the definition of "tax" under the Income-tax Act, 1961, formed the basis for the decision. The detailed analysis and legal scrutiny conducted by the Tribunal resulted in the dismissal of the Revenue's Miscellaneous Petition, emphasizing adherence to the prescribed limits and legal definitions in tax-related matters.