2017 (5) TMI 1554 - AT - Income Tax

Maintainability of appeal - tax effect in dispute in the captioned appeal - monetary limit - disallowance under section 14A restricted by CIT-A - Held that - Our Co-ordinate Bench in the case of DCIT vs. M/s. Dome Bell Electronics India Ltd. 2016 (7) TMI 1372 - ITAT MUMBAI has held that for the purposes of considering the amount of tax effect as envisaged in CBDT Circular dated 10/12/2015 what has to be considered is the amount of tax excluding the amount of surcharge and education cess. Therefore, in this view of the matter, the tax effect in dispute in the captioned appeal is stated to be below the monetary limit of ₹ 10.00 lacs specified in the CBDT Circular dated 10/12/2015, the same is dismissed as not maintainable.

Summary

Issues:
- Disallowance under section 14A of the Income Tax Act, 1961
- Tax effect involved in the appeal

Analysis:
- The appeal filed by the Revenue was against an order passed by the CIT(A)-47, Mumbai, arising from an order by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 for the assessment year 2010-11.
- The main issue raised by the Revenue in the appeal was regarding the disallowance of &8377; 33,67,807 under section 14A of the Income Tax Act, 1961. The Revenue argued that the CIT(A) was not justified in deleting the disallowance, emphasizing the mandatory nature of the disallowance under section 14A read with rule 8D from A.Y. 2008-09 onwards.
- During the hearing, it was pointed out that the tax effect involved in the appeal was less than &8377; 10.00 lacs as per the CBDT Circular No.21/2015, which revised the monetary limits for filing appeals by the Department before the Tribunal retrospectively. The Department did not dispute this fact.
- The Assessing Officer had initially disallowed &8377; 33,67,807 under section 14A, which was later restricted to &8377; 79,836 by the CIT(A). The disputed amount in the appeal was &8377; 32,87,971, with a tax effect of &8377; 9,86,391, excluding surcharge and education cess. The Tribunal referred to a previous case to clarify that the tax effect should be calculated excluding surcharge and education cess.
- Since the tax effect in dispute was below the monetary limit of &8377; 10.00 lacs specified in the CBDT Circular, the appeal was dismissed as not maintainable. Consequently, the appeal of the Revenue was dismissed, and the order was pronounced in the presence of both parties on 31/05/2017.