2019 (8) TMI 1820 - HC - Income Tax

Maintainability of appeal before HC on low tax effect - Deduction u/s 80P - Is not the finding of the Tribunal bad by holding that the assessee is not in banking business and not a cooperative bank hit by provisions of Section 80P(4) of the Income Tax Act? - Whether Tribunal was right in holding that the revenue has failed to provide that the assessee is covered by Explanation (a) and (b) of Section 80P(4) without appreciating the fact that the assessee s activity are not confined to a Taluk as stipulated in the Explanation pertaining to Primary Cooperative Agricultural and Rural Development Bank? - HELD THAT - As the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore - tax effect in this case is less than the threshold limit. Thus the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed are left open. In the event the tax effect is above the threshold limit fixed in the said circular liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs.

Summary

Issues involved:
- Appeal filed by Revenue under Section 260A of the Income Tax Act, 1961 against an order dated 01.05.2014 made in ITA No. 1318/MDS/2013 on the file of the Income Tax Appellate Tribunal, Chennai 'D' Bench for the assessment year 2009-10.
- Substantial questions of law regarding the entitlement to claim deduction under Section 80P of the Income Tax Act, classification of the assessee as not in banking business or a cooperative bank, and the failure of the revenue to prove coverage under Explanation (a) and (b) of Section 80P(4).

Analysis:

1. The appeal was admitted on substantial questions of law related to the entitlement of the assessee to claim deduction under Section 80P of the Income Tax Act, the classification of the assessee as not being in banking business or a cooperative bank, and the failure of the revenue to establish coverage under Explanation (a) and (b) of Section 80P(4).

2. The learned Senior Standing Counsel for the appellant informed the court that the appeal was not being pursued by the Revenue due to the low tax effect, as per Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes, which increased the monetary limit for filing or pursuing an appeal before the High Court to Rs.1 Crore. It was highlighted that the tax effect in this case fell below the threshold limit set by the circular.

3. Consequently, the tax case appeal was dismissed due to the low tax effect, with the substantial questions of law left open. However, the court granted liberty to the Revenue to request restoration of the appeal for hearing and decision on merits if the tax effect exceeded the threshold limit specified in the circular. No costs were awarded in this regard.

4. The judgment was delivered by Mr. T.S. Sivagnanam, J., and the case was handled by legal counsels representing both the appellant/revenue and the respondent/assessee. The decision was based on the assessment of the tax effect and the applicability of the circular issued by the Central Board of Direct Taxes regarding the monetary limit for appeals before the High Court.