2015 (8) TMI 370 - HC - Income Tax

Payment of the employees contribution towards Provident Fund and ESI beyond the due date - correctness of the order of the ITAT sustaining the decision of the CIT(A) that while computing the deduction under Section 80HHC amount of ₹ 58,41,674 should not be excluded from the eligible profits - Held that - The net tax effect in relation to the two issues raised by the Revenue is only ₹ 4,81,080 which is far less than monetary limit set by the Central Board Direct Taxes, New Delhi by its Instruction No. 5/2014 dated 10th July 2014 for the filing of appeals by the Revenue.he Court is satisfied that in terms of the Instruction No.5/2014 of the CBDT, the Revenue ought not to have preferred the present appeal. - Decided against revenue.

Summary

Issues:
1. Appeal by Revenue under Section 260-A of the Income Tax Act, 1961 against ITAT order for Assessment Year 2004-05.
2. Two issues raised: (i) deletion of addition of employees' contribution towards Provident Fund and ESI beyond due date, (ii) exclusion of amount while computing deduction under Section 80HHC.

Analysis:
1. The appeal was filed by the Revenue against the ITAT order for the Assessment Year 2004-05. Two main issues were raised: (i) the deletion of an addition made by the AO regarding employees' contribution towards Provident Fund and ESI beyond the due date, and (ii) the exclusion of a specific amount while computing the deduction under Section 80HHC of the Act.

2. The Respondent Assessee pointed out that the net tax effect related to the issues raised by the Revenue was only Rs. 4,81,080, which was below the monetary limit set by the CBDT for filing appeals by the Revenue. The Respondent provided a note showing the actual tax effect, clarifying that the figure mentioned in the memo of appeal included taxes from other issues as well, not just the two issues raised in the appeal.

3. The Court acknowledged that the net tax effect for the issues raised by the Revenue was below the limit set by the CBDT. It was noted that the Revenue should not have preferred the appeal as per the Instruction No.5/2014 of the CBDT. The Court found that the appeal did not meet the criteria for filing set by the CBDT.

4. Considering the above, the Court dismissed the appeal filed by the Revenue. The decision was based on the fact that the net tax effect for the issues raised did not meet the monetary limit set by the CBDT, as per the guidelines provided in Instruction No.5/2014.