2012 (9) TMI 751 - AT - Income Tax

Monetary limit for appeal in Tax related matters before ITAT Appeal filed with Tribunal prior to the instruction regarding the minimum monetary limit stipulated by the Board Revenue contended that the amount in appeal is above the minimum prescribed limit as per previous instruction Held that - Following the decision in case of Seedi Builders (2011 (11) TMI 402 - KARNATAKA HIGH COURT) it is clear that the instructions issued in the Circulars by CBDT are applicable for pending cases also. Appeal decides in favour of revenue

Summary

Issues Involved:
1. Applicability of CBDT Instruction No. 3/2011 to pending cases.
2. Monetary limit for filing appeals by the Department before the ITAT.
3. Validity of the ITAT's order dated 17.10.2011 in light of the monetary limit.

Detailed Analysis:

1. Applicability of CBDT Instruction No. 3/2011 to Pending Cases:
The primary issue was whether the Instruction No. 3/2011 issued by the CBDT on 09.02.2011, which set a monetary limit for filing appeals, applied to cases that were already pending. The Tribunal referenced multiple judgments, including those from the Bombay High Court and Delhi High Court, which held that such instructions are applicable to pending cases. Specifically, the Bombay High Court in CIT v. Madhukar K. Inamdar (HUF) (318 ITR 149)(Bom) stated that the instructions fixing monetary limits are applicable to pending cases. Similarly, the Delhi High Court in CIT v. Delhi Race Club Ltd. and the jurisdictional High Court in CIT v. Ranka & Ranka supported this view, emphasizing that the instructions should be applied retrospectively to pending cases to reduce litigation and align with the National Litigation Policy.

2. Monetary Limit for Filing Appeals by the Department before the ITAT:
The CBDT Instruction No. 3/2011 set the monetary limit for filing appeals before the ITAT at Rs. 3,00,000. The Tribunal noted that the tax effect in the present appeal was Rs. 2,15,280, which is below the prescribed limit. The Tribunal referenced the National Litigation Policy, which aims to reduce frivolous litigation by the government and emphasized that the monetary limit should apply to pending cases as well. The Tribunal also cited the Supreme Court's judgments in CCE v. Mysore Electrical Industries Ltd. and SUCHITRA COMPONENTS LTD. V. COMMISSIONER OF CENTRAL EXCISE, GUNTUR, which held that beneficial circulars should be applied retrospectively.

3. Validity of the ITAT's Order Dated 17.10.2011:
The Tribunal upheld its previous order dated 17.10.2011, which dismissed the Department's appeal on the grounds that the tax effect was below the monetary limit. The Tribunal clarified that the only amendment needed in the order was to correct the monetary limit mentioned from "less than Rs. 2 lakhs" to "less than Rs. 3 lakhs." The Tribunal found no infirmity in its earlier order and dismissed the Miscellaneous Petition filed by the Department, reiterating that the appeal was rightly dismissed based on the prevailing monetary limits.

Conclusion:
The Tribunal dismissed the Miscellaneous Petition filed by the Department, affirming that the CBDT Instruction No. 3/2011, which set a monetary limit of Rs. 3,00,000 for filing appeals, applies to pending cases. The Tribunal corrected the monetary limit mentioned in its previous order and upheld the dismissal of the Department's appeal, as the tax effect was below the prescribed limit.