2015 (2) TMI 632 - HC - Income Tax

Monetary limit to prefer an appeal - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that - On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this 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 that this is a case, where, in the case of revenue, where constitutional validity of the provision 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. The learned Standing Counsel for the Revenue is not disputing the fact that the tax effect in the present case is less than ₹ 4 Lakhs and that the assessee s case does not fall within the exceptions specified in Instruction No.1979, dated 27.3.2000. Thus appeals are dismissed as not maintainable. - Decided against revenue.

Summary

Issues:
1. Monetary limit for prefer an appeal challenged by Revenue.
2. Tax liability on cost of renovation and construction of nurses quarters.
3. Maintainability of Department's Tax Case Appeal based on monetary limit.
4. Exceptions specified in Instruction No.1979 for contesting appeals irrespective of revenue effect.

Analysis:
1. The Revenue challenged an order of the Income Tax Appellate Tribunal regarding the addition of amounts for renovation and construction during a specific block period. The questions of law raised included the deletion of certain additions and the charging of interest under Section 158BFA(1). However, the appeals were not entertained due to a preliminary objection regarding the monetary limit set by the Central Board of Direct Taxes for filing appeals.

2. The tax liability in question pertained to the Assessing Officer's additions for renovation and construction of nurses quarters. The total tax effect was calculated, excluding interest, and found to be below the monetary limit specified for filing an appeal. The Assessee argued that they did not fall within any exceptions provided in the instruction mandating the department to prefer an appeal.

3. The Assessee contended that the case did not meet the exceptions specified in Instruction No.1979 issued by the Central Board of Direct Taxes, which mandated contesting appeals irrespective of revenue effect under certain circumstances. The Revenue did not dispute that the tax effect in the present case was below the specified limit and that the exceptions did not apply.

4. The Court, considering the circulars issued by the Central Board of Direct Taxes and the tax effect involved in the case, dismissed the appeals as not maintainable without delving into the merits of the questions of law raised. The decision was based on the failure to meet the monetary limit for filing an appeal and the absence of circumstances warranting an appeal under the exceptions specified in Instruction No.1979.