2014 (6) TMI 533 - AT - Income Tax

Tax effect below prescribed limit - monetary limit for filing an appeal - Held that - Assessee rightly contended that the tax effect in the case is less than Rs.3.00 Lacs - The position was admitted by the Sr. DR, Ms. Meenakshi Vohra and the parties were directed to place the exact tax effect involved on record - no calculations were provided by the parties - Instruction No.-3/2011 F.No.279/MISC. 142/2007-ITJ , Dated 09.02.2011 dated 09.02.2011 clearly sets out the tax effect will not include interest thereof as such the tax effect is below Rs.3.00 lacs if the interest in the calculation provided is reduced also it had been held by the high court that the tax impact is less than Rs. 10.00 lacs revenue has recently issued an instruction bearing no. 3/2011 dated 09.02.2011, which is identical to its earlier instruction bearing no. 5/2008 dated 15.05.2008 - the monetary limit in respect of appeals where the questions of law raised need not to be answered, has been raised from Rs. 4.00 lacs to Rs. 10.00 lacs - the instruction bearing no. 5/2008 dated 15.05.2008 would apply even to the old pending references and appeals - the principle would thus naturally equally apply to the instant instruction bearing no.3/2011 dated 09.02.2011, as well- The tax effect being less than Rs. 10.00 lacs, the question of law does not require to be answered. The appeals are disposed of accordingly - Instruction No.3/2011 dated 09.02.2011 will apply to the present appeal Decided against Revenue.

Summary

Issues:
1. Disallowance of deduction u/s 80IC.
2. Tax effect below Rs.3.00 Lacs.

Issue 1: Disallowance of deduction u/s 80IC
The Revenue appealed against the CIT (Appeals) order for the assessment year 2009-10, challenging the deletion of additions made by the Assessing Officer (AO) regarding disallowance of deduction u/s 80IC. The grounds of appeal highlighted various aspects, including the failure of the assessee to fulfill basic conditions for claiming the deduction, employing below 10 labor/workers with minimal electricity expenses, absence of a list of employees, questionable machinery purchase, and the nature of gas stove parts purchase and manufacturing activities. The CIT (Appeals) had deleted these additions. The appellant sought to add, amend, or modify the grounds of appeal during the course of the appeal.

Issue 2: Tax Effect below Rs.3.00 Lacs
During the proceedings, the tax effect in the case was found to be less than Rs.3.00 Lacs. The parties were directed to provide the exact tax effect, but no calculations were initially provided. Subsequently, calculations were presented showing the tax involved in the appeal to be Rs.2,63,352/-. The Ld. AR pointed out that as per Instruction No.-3/2011, the tax effect should not include interest, and if interest is excluded, the tax effect remains below Rs.3.00 Lacs. The department confirmed that the tax effect was below the specified limit of Rs.3.00 Lacs as per the Board's instruction. Citing a decision of the Delhi High Court, it was held that the appeal was not maintainable due to the tax impact being less than Rs.10.00 Lacs. Consequently, the department's appeal was dismissed based on the monetary limit set by the instruction.

In conclusion, the ITAT Delhi dismissed the department's appeal without delving into the merits of the case, citing the tax effect being below the specified threshold as per the relevant instructions and judicial decisions.