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2024 (10) TMI 109 - HC - Income TaxMaintainability of appeal on low tax affect - tax effect for filing appeals in Income Tax matters - HELD THAT - Monetary limits, the CBDT has clarified that the same shall be applicable with the exceptions which are carved out in 3.1 (1) where decision to appeal/file SLP is taken on merits and without regard to tax effect and the monetary limits. Revenue would have to take a clear stand in so far as the present appeal is concerned, whether a decision to file appeal was taken on merits and without regard to the tax effect as involved. We accordingly dispose of this Application with liberty to the Applicant Revenue to file a fresh Application making out a case as would be required to be pleaded in terms of the clarification dated 19th June 2023 issued by the CBDT read with further Circular No. 5 of 2024 as noted by us herein above. At this stage, Respondent would submit that the CBDT has now issued a fresh circular dated 17th September 2024 which can also be taken into consideration. It is for the Revenue to take appropriate decision in this regard.
Issues:
Interpretation of CBDT Circular on tax effect for filing appeals in Income Tax matters. Analysis: The High Court of Bombay heard an interim application filed by the Applicant-Revenue challenging an order permitting the withdrawal of an Income Tax Appeal due to a low tax effect as per CBDT Circular No. 17 of 2019. The Coordinate Bench had disposed of the appeal citing low tax effect based on the circular. The Revenue contended that a clarification issued by CBDT in their case stated that the tax effect limits for filing appeals are derived from Circular 3 of 2018, and in certain cases, like those under section 248 of the IT Act, the tax effect might not be quantifiable. The CBDT's circular exempts writ and direct tax matters other than Income tax from monetary limits, emphasizing the need for a case-by-case merit analysis for filing appeals. Additionally, the circular addresses TDS cases in international taxation charges where appeals may be filed to protect revenue interests. The Revenue was directed to incorporate these inputs in their court reply after consulting with the Department Counsel. The Court was informed about a recent circular, Circular No. 5 of 2024, superseding the earlier circular and providing clarifications on TDS/TCS cases. The new circular specified that monetary limits for filing appeals apply to all cases, except for specific scenarios related to TDS/TCS matters where the decision to appeal should be based on merits rather than tax effect or monetary limits. The circular detailed exceptions for TDS/TCS disputes in domestic and international taxation charges. It was highlighted that for cases involving TDS/TCS, the cumulative effect of all orders for an assessment year should be considered, including interest under section 201(1A) of the Act. Considering the clarifications provided by CBDT in the applicant's case and the subsequent Circular No. 5 of 2024, the Court disposed of the application with liberty for the Revenue to file a fresh application based on the updated circulars. The Respondent pointed out another fresh circular dated 17th September 2024, leaving the decision on whether to consider it to the Revenue. The application was disposed of, granting liberty to the Revenue to take appropriate action in light of the recent circulars.
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