2014 (12) TMI 425 - AT - Income Tax

Maintainability of appeal Tax effect less than prescribed monetary limit for filing appeal Tax effect less than Rs. 4 lacs Revision of monetary limits through circular - Held that - Following the decision in CIT Vs M/s. P. S. Jain & Co. 2010 (8) TMI 702 - Delhi High Court - the Board has rightly taken a decision not to file references if the tax effect less than the amount prescribed - The same policy for old matters needs to be adopted by the Department - Instruction No.5/2014 FNo279/Misc.142/2007-ITJ(Pt) dated 10th July 2014 will apply to pending appeals also for the reason that the same is exactly identical to earlier instructions - also in The Commissioner of Income Tax v. Smt. Vijaya V. Kavekar 2013 (2) TMI 451 - Bombay High Court it has been held that the applicability of circular was considered and the monetary limit was increased and appeals were to be filed only in cases where the tax effect exceeded Rs. 4 Lacs - no appeals would be filed in the cases involving tax effect less than Rs. 4 Lacs notwithstanding the issue being of recurring nature - the prevailing instructions fixing the monetary limit for the tax effect would hold good even for pending cases revenue could not point out any of the exceptions - this being a low tax effect case the appeal cannot be admitted Decided against revenue.

Summary

Issues Involved:
1. Applicability of monetary limit for filing an appeal before ITAT.
2. Validity of the CIT(A)'s decision in light of SBI's e-circular and Board's instructions.
3. Compliance with Rule 2BA of the I.T. Rules, 1962.

Issue-wise Detailed Analysis:

1. Applicability of Monetary Limit for Filing an Appeal Before ITAT:
The primary issue addressed in the judgment is whether the appeal filed by the Revenue is maintainable given that the tax effect involved is less than Rs. 4 lakhs, as per the revised monetary limit set by CBDT Instruction No. 5/2014 issued on 10.7.2014. The Tribunal noted that the tax effect in this appeal is below the prescribed monetary limit for filing an appeal before ITAT. The Revenue's representative argued that the instruction should not apply to appeals filed prior to 10.7.2014. However, the Tribunal referred to precedents from the Hon'ble Delhi High Court and Hon'ble Gujarat High Court, which held that such instructions should apply to pending cases to reduce litigation where the tax effect is minimal. The Tribunal concluded that the recent instruction, which revises the monetary limit to Rs. 4 lakhs, applies to pending appeals as well, and thus, the appeal is not maintainable.

2. Validity of the CIT(A)'s Decision in Light of SBI's E-Circular and Board's Instructions:
The Revenue contended that the CIT(A) ignored the e-circular on the "EXIT OPTION" Scheme issued by the State Bank of India, which explicitly mentioned that no exemption of ex-gratia from income tax under section 10(10C) of the I.T. Act, 1961, is intended in that scheme. The Tribunal did not delve into the merits of this argument due to the dismissal of the appeal based on the monetary limit.

3. Compliance with Rule 2BA of the I.T. Rules, 1962:
The Revenue argued that the CIT(A) presumed compliance with Rule 2BA of the I.T. Rules, 1962, ignoring the SBI e-circular and Board's instructions, which stated that the scheme framed by the State Bank of Patiala and State Bank of India does not lay out eligibility for deduction under section 10(10C). Again, the Tribunal did not address the merits of this issue due to the dismissal of the appeal based on the monetary limit.

Conclusion:
The Tribunal dismissed the appeal of the Revenue in limine due to the tax effect being below the prescribed monetary limit of Rs. 4 lakhs, as per CBDT Instruction No. 5/2014. The Tribunal emphasized that the instruction applies to pending appeals, aligning with the objective of reducing litigation where the tax effect is minimal. The Tribunal did not address the merits of the arguments regarding the SBI e-circular and compliance with Rule 2BA due to the dismissal based on the monetary limit. The appeal was dismissed without going into the merits, and the order was pronounced in open court on 17/11/2014.