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2013 (2) TMI 451 - HC - Income TaxInstruction of CBDT Monetary limits for the Revenue to file appeals before the High Court - Revenue has filed appeals contention of the assessee is that since the tax effect is less than the monetary limit of ₹ 10 lakhs prescribed in Instruction No. 3 of 2011 issued by the CBDT, appeals are not maintainable Held that - section 268A has been introduced on the statute book with retrospective effect. Section 268A carves out an exception for filing of appeals and references under section 260A of the Act Further the Legislature has prescribed that the CBDT is empowered to issue circulars and instructions from time to time, with regard to filing of appeals depending on the tax effect involved Instruction No. 3 of 2011 provides that appeals shall not be filed in cases where the tax effect does not exceed ₹ 10 lakhs. Delhi High Court in the case of CIT v. Delhi Race Club Ltd. 2011 (3) TMI 1488 - High Court of Delhi has held that, CBDT circular raising the monetary limit of the tax effect to ₹ 10 lakhs would be applicable to the pending cases also Therefore circulars or instructions issued under section 268A of the Income-tax Act by the CBDT are applicable not only to new cases but to pending cases as well. Such circulars have been issued under section 268A of the Income-tax Act, which is an exception to the provisions of section 260 of the Act. The CBDT being mindful of this position has issued the aforesaid instructions - The main objective of such instructions is to reduce the pending litigations where the tax effect is considerably small Therefore tax appeals are required to be dismissed.
Issues Involved:
1. Applicability of CBDT Instructions to pending appeals. 2. Monetary limits for filing appeals under section 260A of the Income-tax Act. 3. Interpretation of various CBDT Instructions and circulars over time. Issue-wise Detailed Analysis: 1. Applicability of CBDT Instructions to Pending Appeals: The primary issue is whether the instructions issued by the Central Board of Direct Taxes (CBDT) regarding monetary limits for filing appeals are applicable to pending cases. The court has consistently held that such instructions apply to both new and pending cases. This has been affirmed in multiple judgments including CIT v. Pithwa Engg. Works and CIT v. Madhukar K. Inamdar (HUF), where it was noted that the instructions aim to reduce litigation in small cases and should be applied to pending appeals to alleviate the burden on courts. 2. Monetary Limits for Filing Appeals: The appeals in question involve tax effects below the monetary limit prescribed by the CBDT. The tax effect in Tax Appeal No. 76 of 2007 is Rs. 5,29,625 and in Tax Appeal No. 78 of 2007 is Rs. 2,28,040, both below the Rs. 10 lakhs limit set by Instruction No. 3 of 2011. The court noted that the CBDT has periodically revised these limits to reduce litigation, with the latest instruction raising the limit to Rs. 10 lakhs. Previous instructions had set lower limits, but the principle of reducing minor litigations remains consistent. 3. Interpretation of Various CBDT Instructions and Circulars: The court examined the evolution of CBDT instructions: - Instruction of March 27, 2000: Set a limit of Rs. 2 lakhs for filing appeals. - Instruction No. 2 of 2005: Raised the limit to Rs. 4 lakhs and included exceptions for substantial questions of law. - Instruction No. 5 of 2008: Further raised the limit to Rs. 4 lakhs and clarified that it applies to appeals filed on or after May 15, 2008, but not to pending appeals. - Instruction No. 3 of 2011: Raised the limit to Rs. 10 lakhs and applied to appeals filed on or after its issuance. The court emphasized that the instructions are meant to reduce the burden of minor cases on the judiciary and should be applied to pending cases as well, aligning with the legislative intent behind section 268A of the Income-tax Act. This interpretation was supported by judgments in CIT v. Polycott Corporation and CIT v. Ashok Kumar Manibhai Patel and Co., which held that the instructions apply to pending cases to achieve the objective of reducing litigation. Conclusion: The court concluded that the CBDT instructions regarding monetary limits for filing appeals are applicable to pending cases. The primary objective of these instructions is to reduce minor litigation and judicial burden. As the tax effects in the present appeals are below the prescribed limit of Rs. 10 lakhs, the appeals are dismissed as not maintainable under section 268A of the Income-tax Act and the relevant CBDT instructions. The appeals are accordingly dismissed.
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