2013 (5) TMI 688 - HC - Income Tax

Maintainability of appeal - revenue appeal against ITAT allowing the interest u/s 244A on payment of taxed under section 140A - Held that - It could not enable the Revenue to ignore the conditions of the circular dated 9.2.2011 and file appeal which is other-wise not envisaged in the said circular. This Court in case of CIT v. Concord Pharmaceuticals 2008 (8) TMI 344 - GUJARAT HIGH COURT held that the instructions issued in the said circular dated 9.2.2011 are binding on the department. Thus an appeal which is filed ignoring said directives would not be maintainable. Such is the view taken by various High Courts. In the result, tax appeal is dismissed only on this ground.

Summary

Issues:
1. Entitlement to interest under section 244A on payment of tax under section 140A.
2. Admissibility of appeal by Revenue based on the Constitutional validity of provisions under challenge.

Analysis:
1. The first issue revolves around the entitlement of the assessee to interest under section 244A on payment of tax under section 140A. The Tribunal's judgment was challenged by the Revenue, questioning the justification of allowing interest under section 244A in such a scenario. The argument presented was that while the Act provides for interest on delayed refund payments, it does not cover interest on interest. The ITAT's decision in a previous case was cited to support this stance. However, the High Court did not delve into this issue on its merits due to the monetary limit set by the CBEC circular, which permits the Revenue to file appeals in High Court based on certain exceptions.

2. The second issue pertains to the admissibility of the appeal by the Revenue based on the Constitutional validity of the provisions under challenge. The circular dated 9.2.2011 outlines exceptions where appeals can be entertained despite the tax effect being below the prescribed limit. One such exception includes cases where the Constitutional validity of the provisions of an Act or Rule is under challenge. The Revenue contended that since the validity of statutory provisions was in question, the appeal should be entertained. However, the High Court emphasized that the vires of statutory provisions were not under scrutiny in the present appeal. The court referred to a previous case to highlight that appeals filed disregarding the directives in the circular would not be maintainable. Consequently, the court dismissed the tax appeal solely on this ground, emphasizing the binding nature of the circular's instructions on the department.

In conclusion, the High Court dismissed the tax appeal primarily due to the Revenue's failure to meet the conditions specified in the CBEC circular dated 9.2.2011, which govern the admissibility of appeals based on exceptions, including the Constitutional validity of provisions being under challenge. The judgment underscores the significance of adhering to directives and guidelines while pursuing appeals, highlighting the binding nature of such instructions on the concerned department.