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2014 (12) TMI 755 - AT - Income TaxMaintainability of appeal Tax effect less than prescribed monetary limit for filing appeal Tax effect less than ₹ 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 ₹ 4 Lacs - no appeals would be filed in the cases involving tax effect less than ₹ 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.
Issues Involved:
1. Whether the appeal filed by the Revenue is maintainable given the tax effect is below the prescribed monetary limit as per CBDT Instruction No. 5/2014. Issue-wise Detailed Analysis: Issue 1: Maintainability of the Appeal Based on Tax Effect The primary issue before the Tribunal was whether the appeal filed by the Revenue, which had a tax effect below the prescribed limit as per the recent CBDT Instruction No. 5/2014, was maintainable. The Instruction, issued on 10.07.2014, revised the monetary limits for filing appeals, setting a threshold of Rs. 4 lakhs for appeals before the ITAT. The counsel for the assessee argued that the appeal was not maintainable as the tax effect was below Rs. 4 lakhs. The Revenue's representative contended that the Instruction should apply prospectively to appeals filed on or after 10.07.2014, not to those filed before this date. Judicial Precedents and Interpretation: The Tribunal referred to several judicial precedents to resolve the issue. The Hon'ble Delhi High Court in CIT Vs M/s. P. S. Jain & Co. had observed that the CBDT's decision to not file references with a tax effect below Rs. 2 lakhs should apply to old matters as well, aiming to reduce the burden on the Department and the judiciary. Similarly, the Hon'ble Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF) held that CBDT instructions should apply to pending cases, even if they were filed before the issuance of the instruction. This view was supported by the Bombay High Court in Commissioner of Income Tax v. Smt. Vijaya V. Kavekar, which emphasized that the objective of such instructions is to reduce litigation where the tax effect is minimal. Application of CBDT Instruction No. 5/2014: The Tribunal noted that the recent Instruction No. 5/2014, which set the monetary limit for filing appeals at Rs. 4 lakhs, was similar to earlier instructions and aimed at reducing pending litigation. The Instruction explicitly stated that it would apply to appeals filed on or after 10.07.2014, but judicial precedents indicated that such instructions should also apply to pending cases to achieve their objective. Exceptions to the Instruction: The Tribunal also examined whether any exceptions to the Instruction applied to the case. The Revenue failed to demonstrate any exceptions, such as: - Tax effect in a loss case exceeding the prescribed limit. - Composite orders involving multiple assessment years with a cumulative tax effect above the limit. - Challenges to the constitutional validity of a provision. - Cases where a Board's order, Notification, Instruction, or Circular was held illegal or ultra vires. - Accepted Revenue Audit Objections under challenge. Since none of these exceptions were applicable, the Tribunal concluded that the appeal was not maintainable due to the low tax effect. Conclusion: The Tribunal dismissed the appeal filed by the Revenue, citing the low tax effect and adherence to CBDT Instruction No. 5/2014. The decision was pronounced in the open Court on 17th December 2014, emphasizing the importance of reducing unnecessary litigation and adhering to prescribed monetary limits for filing appeals.
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