2013 (5) TMI 556 - AT - Income Tax

Maintainability of appeal - assessee stated that that tax effect in this appeal of the revenue is below the prescribed monetary limits for filing of appeal before ITAT and other superior courts - Held that - Since this appeal filed on 06.05.2009, the same will be covered by Instruction No. 3/2011 issued on 09.02.2011 i.e. the revised monetary limit for filing of appeal before ITAT, whereby the CBDT has fixed the limit of Rs. 3 lacs. whereas the amount in dispute involved is Rs.6,50,000/- on which tax demand to be raised on the assessee is Rs.2,38,875/-. DR could not point out any of the exceptions as provided in the Circular that this is a loss case having tax effect more than the prescribed limit, which should be taken into account, or is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions,or there is other year pending as disputed on the singular issue, or that in the case of revenue, where constitutional validity of the provisions of the Act or I.T. Rules 1962 are under challenge or that Board s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge - appeal of the revenue is dismissed.

Summary

Issues:
Determining the applicability of monetary limits for filing appeals before ITAT and other superior courts based on tax effect.

Analysis:
The appeal by revenue arose from an order of CIT(A)-XXXII, Kolkata for Assessment Year 2003-04. The tax effect in the appeal was below the prescribed monetary limits for filing appeals before ITAT and other superior courts. The issue before the Tribunal was whether the appeal of the revenue fell below the limit set by the CBDT's Instruction No. 3/2011, which revised the monetary limit to Rs. 3 lacs for filing appeals. The Tribunal considered the decision of the Hon'ble Delhi High Court in the case of CIT Vs Delhi Race Club, where it was held that appeals with a tax effect less than 10 lacs should not be entertained. The Tribunal applied the revised monetary limit of Rs. 3 lacs to pending appeals based on the Delhi High Court's decision.

The CBDT's circular clarified that the tax effect is the difference between the tax on the total income assessed and the tax that would have been chargeable if the total income were reduced by the amount of income related to the disputed issues. The circular specified that appeals should not be filed solely based on exceeding monetary limits, and the tax effect should be calculated separately for each assessment year. It was emphasized that in cases of composite orders involving multiple assessment years, appeals should be filed for all relevant years if the tax effect exceeds the limit in any year. The circular also outlined exceptions where adverse judgments on specific issues should be contested on merits regardless of the tax effect.

During the hearing, the Ld. DR could not identify any exceptions as provided in the circular, such as loss cases exceeding the limit, composite orders for multiple years, pending disputes on singular issues, challenges to constitutional validity, or acceptance of Revenue Audit objections. As no exceptions were applicable, the Tribunal dismissed the revenue's appeal without delving into the merits. The decision was based on the tax effect falling below the prescribed limit, following the CBDT's instructions and the absence of any relevant exceptions.

In conclusion, the Tribunal dismissed the revenue's appeal due to the tax effect being below the monetary limit specified by the CBDT's Instruction No. 3/2011. The decision was in line with the guidelines on filing appeals based on tax effect and exceptions outlined in the circular. The Tribunal's ruling highlighted the importance of adhering to the prescribed monetary limits and considering exceptions for contesting adverse judgments on specific issues.