2019 (10) TMI 1535 - SC - Income Tax

Maintainability of appeal on low tax effect - issue before the High Court was whether the Instruction Order No. 5/2008 dated 15.05.2008 could be availed by the appellant(s), providing for disposal of the appeal(s) filed by the respondent involving low tax effect? - HELD THAT - Similar question came up for consideration before this Court in Director of Income Tax, Circle 26(1), New Delhi vs. S.R.M.B. Dairy Farming (P) Ltd., 2017 (11) TMI 1494 - SUPREME COURT This Court after considering the decisions of different High Courts, including the Supreme Court decision on the question involved, namely, Commissioner of Income Tax Vs. Surya Herbal Ltd. 2011 (8) TMI 137 - SC ORDER answered the question in favour of assessee The same interpretation must apply to the instructions under consideration. In the present case, there is no possibility of cascading effect nor the issue is involved in group of matters, as such. Therefore, the appeals are allowed. As a result, the impugned judgment is set aside and the appeals filed by the respondent before the High Court be treated as dismissed in terms of this order because of low tax effect, leaving questions of law open.

Summary

Issues:
Appeal against judgment dated 23.09.2008 by High Court of Karnataka regarding Instruction Order No. 5/2008 applicability for disposal of appeals involving low tax effect.

Analysis:
The primary issue in this case was whether the Instruction Order No. 5/2008 dated 15.05.2008 could be utilized by the appellant(s) for disposing of appeals involving low tax effect. The High Court considered Clauses 8 and 11 of the said Instruction, particularly noting that appeals filed on or before 15.05.2008 would be governed by the instructions in force at the time of filing. This issue had been addressed previously in Director of Income Tax, Circle 26(1), New Delhi vs. S.R.M.B. Dairy Farming (P) Ltd. The Supreme Court, referencing Commissioner of Income Tax Vs. Surya Herbal Ltd., clarified the applicability of the Circular of 2011 to pending litigations. The Court emphasized the need for clarity and highlighted the importance of adhering to the instructions with due consideration to the interests of the Revenue.

The Court held that the interpretation applied to the Circular of 2011 should also extend to the instructions in question. Since there was no potential cascading effect or involvement in a group of matters, the appeals were allowed. Consequently, the impugned judgment was set aside, and the appeals by the respondent were deemed dismissed due to low tax effect, with questions of law left open for consideration. Any pending applications were disposed of accordingly. The decision provided clarity on the application of instructions in cases involving low tax effect, ensuring consistency and adherence to established legal principles.