2018 (7) TMI 2269 - AT - Income Tax

Monetary limit to file appeal before ITAT - Low tx effect - whether tax effect is below the monetary limit ? - Default u/s 201(1)/201(1A) - HELD THAT - As it has been clarified that tax effect shall be tax including applicable surcharge and cess. However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. Thus, while calculating the tax effect in the instant case, one has to exclude the interest of Rs.5,52,885/- determined by the AO u/s 201(1A) - Thereby the tax effect herein does not exceed the monetary limit of Rs.20,00,000/- fixed for filing appeal before the Tribunal. Appeal filed by the revenue is dismissed as not pressed.

Summary

Issues:
Appeal against deletion of addition made by AO under sections 201(1)/201(1A) of the Income Tax Act 1961 due to TDS deduction discrepancy.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved a dispute regarding the deduction of Tax Deducted at Source (TDS) under sections 194C and 194J of the Income Tax Act 1961 for the assessment year 2011-12. The Revenue challenged the order of the Commissioner of Income Tax (Appeals) which deleted the addition made by the Assessing Officer under sections 201(1)/201(1A) of the Act. The crux of the matter was whether the payment made under a composite agreement for collection, transportation, treatment, or disposal of hazardous waste should be subject to TDS under section 194C or 194J, considering it as a technical service for disposal of hazardous waste.

During the hearing, the counsel for the assessee drew attention to Circular No. 3/2018 issued by the Central Board of Direct Taxes (CBDT), highlighting that the tax effect was below the monetary limit of Rs.20,00,000. The Circular clarified that the tax effect should exclude interest unless the chargeability of interest itself is in dispute. Consequently, the tax effect in the present case did not exceed the specified limit for filing an appeal before the Tribunal.

In light of the Circular and the specific tax effect calculation excluding interest, the Tribunal dismissed the appeal filed by the Revenue as not pressed. The Tribunal's decision was based on the fact that the tax effect did not surpass the monetary threshold set for filing appeals, as clarified in Circular No. 3/2018. Therefore, the appeal was dismissed, and the order was pronounced in open court on 25/07/2018.