2015 (12) TMI 1791 - AT - Income Tax

Monetary limit - maintainability of appeal - tax effect - HELD THAT - Instructions of CBDT where the tax effect is less than ₹ 10 lakhs, the appeals filed by the Revenue, which are pending before the Tribunal, are not to be pressed or withdrawn by the Revenue authorities. Since the tax effect in the above appeals filed by the Revenue is admittedly less than ₹ 10 lakhs in each case, therefore, in view of the instructions of CBDT and the entirety of facts, we dismiss the appeals filed by the Revenue as not maintainable. All the above appeals filed by the Revenue are dismissed.

Summary

Issues:
Appeals filed by Revenue against CIT(A) orders with tax effect below Rs. 10 lakhs.

Analysis:
The judgment pertains to multiple appeals by the Revenue against CIT(A) orders for different Assessment Years with tax effects below Rs. 10 lakhs. The appeals were heard together and disposed of collectively. The CBDT's circular No.21/2015, dated 10.12.2015, was crucial in this case. The circular stated that no Departmental appeal would be filed where the tax effect, excluding interest, does not exceed Rs. 10 lakhs. The circular applied to both future and pending appeals. The tax effect was defined as the difference between the tax on assessed total income and the tax if income was reduced by the disputed amount. The circular specified monetary limits for filing appeals at different levels - Tribunal, High Court, and Supreme Court.

The CBDT clarified that the tax effect should be calculated separately for each assessment year concerning disputed issues. Appeals could be filed only for years where the tax effect exceeded the limit. In cases of composite orders involving multiple years, appeals were required for all relevant years if the tax effect exceeded the limit in any year. The circular also addressed scenarios where disputed issues spanned multiple assessment years. It emphasized that each assessee should be dealt with separately in cases involving multiple taxpayers.

The circular further outlined that adverse judgments on specific issues should be contested regardless of the tax effect. It exempted writ matters and direct tax issues other than Income tax from the monetary limits. The circular had retrospective application to pending and future appeals in High Courts and Tribunals. Appeals below the specified tax limits were to be withdrawn or not pressed. The judgment concluded that since the tax effect in the appeals was below Rs. 10 lakhs, in line with the CBDT instructions, the appeals filed by the Revenue were dismissed as not maintainable. All the Revenue's appeals were consequently dismissed.

In summary, the judgment highlighted the application of CBDT circular No.21/2015 concerning appeals with tax effects below Rs. 10 lakhs. It emphasized the calculation of tax effect, separate treatment for multiple assessment years, and the necessity of appeals based on monetary limits. The judgment upheld the circular's directives, leading to the dismissal of Revenue's appeals due to the tax effect falling below the prescribed threshold.