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2014 (8) TMI 801 - AT - Income TaxMaintainability of appeal - Tax effect below prescribed monetary limit - Revision of monetary limits through circular - Whether the appeal of revenue, which is below the prescribed limit of tax effect in view of the Board s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not Held that - Revenue is not justified in proceeding with the old references wherein the tax impact is minimal - Following the decision in Commissioner of Income-tax Versus PS. Jain and Co. 2010 (8) TMI 702 - Delhi High Court - also in Commissioner of Income Tax v. Smt. Vijaya V. Kavekar 2013 (2) TMI 451 - Bombay High Court it has been held that no appeals would be filed in the cases involving tax effect less than ₹ 4 Lacs notwithstanding the issue being of recurring nature - the main objective of instructions is to reduce the pending litigation, where the tax effect is considerable low or small, the appeal is not maintainable - The recent instruction revising the monetary limit to ₹ 4 lakh for filing appeal before ITAT on income tax matters, as issued vide Instruction No.5/2014 FNo279/Misc.142/2007-ITJ(Pt) dated 10th July, 2014 will apply to pending appeals also for the reason that the same is exactly identical to earlier instructions revenue could not point out any exception to the Circular Decided against Revenue.
Issues Involved:
1. Applicability of CBDT Instruction No. 5/2014 regarding monetary limits for filing appeals before ITAT. 2. Whether the appeal filed by the Revenue is maintainable considering the tax effect is below the prescribed limit. Issue-wise Detailed Analysis: 1. Applicability of CBDT Instruction No. 5/2014 regarding monetary limits for filing appeals before ITAT: The core issue revolves around the applicability of CBDT Instruction No. 5/2014, which revises the monetary limits for filing departmental appeals before ITAT. The instruction sets a threshold of Rs. 4,00,000 for appeals to the ITAT. The counsel for the assessee argued that since the tax effect in this case is Rs. 4,93,149, which is below the prescribed limit, the appeal is not maintainable and should be dismissed in limine. The Revenue's representative contended that the instruction is prospective and should apply only to appeals filed on or after 10.07.2014, thus opposing the applicability to this case. 2. Whether the appeal filed by the Revenue is maintainable considering the tax effect is below the prescribed limit: The tribunal examined precedents from various High Courts to determine the applicability of the CBDT instructions to pending cases. The Hon'ble Delhi High Court in CIT Vs. M/s. P. S. Jain & Co. emphasized that the Board's decision to not file references for minimal tax effects should apply to old matters to reduce the burden on the Department and the judiciary. Similarly, the Hon'ble Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF) held that the instructions would apply to pending cases as well, despite the prospective language in the instruction. The court highlighted that the objective of such instructions is to reduce pending litigation involving low tax effects. The tribunal also referred to the Bombay High Court's decision in Commissioner of Income Tax v. Smt. Vijaya V. Kavekar, which interpreted similar instructions and concluded that they apply to both pending and future cases. The Karnataka High Court in The Commissioner of Income-Tax vs. M/s. Ranka & Ranka also supported this view, stating that the instructions are applicable to pending appeals to reduce litigation. In conclusion, the tribunal found that the CBDT Instruction No. 5/2014, which revises the monetary limit for filing appeals to Rs. 4,00,000, applies to pending appeals as well. The tribunal noted that the Revenue could not point out any exceptions to this instruction, such as cases involving constitutional validity challenges, Board's orders being held illegal, or accepted Revenue Audit Objections. Therefore, considering the tax effect in this case is below the prescribed limit, the tribunal dismissed the appeal of the Revenue in limine without delving into the merits. Judgment: The appeal of the Revenue is dismissed. The order was pronounced in the open court on 12/08/2014.
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