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Issues involved:
The appeal under section 260A of the Income-tax Act, 1961 raises a question regarding the claim for deduction under sections 80HH and 80-I for the assessment year 1990-91. The main issue pertains to the policy decision taken by the Central Board of Direct Taxes to reduce litigations before the High Courts and the Supreme Court based on the tax effect criteria. Deduction Claim Dispute: The appeal concerns the deduction claim under sections 80HH and 80-I of the Income-tax Act for the assessment year 1990-91. The Income-tax Appellate Tribunal had allowed the deduction, leading to the appeal. The respondent argued that the tax effect was minimal, citing a circular by the Central Board of Direct Taxes setting monetary limits for filing appeals. Despite the circular's instructions not to file appeals in certain cases, the Revenue proceeded with the appeal. The court, considering the binding nature of the circular on the Revenue, dismissed the appeal on this ground without delving into the merits of the legal question raised. Policy Decision Impact: The court emphasized the significance of the policy decision by the Central Board of Direct Taxes to reduce litigations based on monetary limits for filing appeals. The respondent relied on legal precedents to assert the binding nature of the circular on the Revenue. Despite the clear instructions in the circular, the Revenue pursued the appeal, contrary to the policy decision aimed at minimizing unnecessary litigations. Consequently, the court, upholding the binding nature of the circular on the Revenue, dismissed the appeal without costs, based on the policy decision not to file appeals in such cases. This summary provides a detailed breakdown of the judgment, highlighting the issues involved, the deduction claim dispute, and the impact of the policy decision on the court's decision to dismiss the appeal.
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