2015 (7) TMI 1014 - AT - Income Tax

Eligible business for claiming deduction u/s 80IC - whether CIT (A) has completely erred to appreciate the implications of income being offered by the assessee itself for taxation and action taken by the A.O. It is a case of deduction u/s 80lC and the assessee did not have profit from eligible business for claiming deduction u/s 801C? - Tax effect in this appeal is less than ₹ 4,00,000/-, therefore, whether the Department ought not to have filed this appeal? - Held that - It is not in dispute that the Board s instruction or directions issued to the other income-tax authorities are binding on those authorities, therefore, the Department ought not to have filed the appeal in view of the above mentioned section 268A since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. Keeping in view the CBDT Instruction No. 5 of 2014 dated 10th July, 2014 and also the provisions of section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal. See CIT vs. Delhi Race Club Ltd. 2011 (3) TMI 1488 - High Court of Delhi - Decided against revenue.

Summary

Issues:
1. Interpretation of deduction u/s 80IC and implications of income offered for taxation.
2. Treatment of unaccounted income introduced as job receipts.
3. Substantiation of source of cash credits for deduction u/s 80-IC.
4. Legality of invoking section 68 for income offered for taxation.

Analysis:
1. The Department appealed against the CIT(A)'s order regarding the assessment year 2010-11, arguing that the assessee erred in claiming deduction u/s 80IC without eligible business profit. The Department contended that the assessee introduced unaccounted money as income from job receipts to avoid tax liability, leading to a dispute over the intent behind the deduction claimed.

2. The AO treated the job receipts as unaccounted income and deemed it as income u/s 68, disallowing business loss set-off. The CIT(A) failed to acknowledge the AO's findings, resulting in a disagreement over the treatment of the income from job receipts and its tax implications.

3. The CIT(A) was criticized for not considering the source of cash credits shown by the assessee for deduction u/s 80-IC. The AO deemed the cash credits unexplained income u/s 68 due to lack of substantiation, leading to a dispute over the eligibility for deduction and business loss carry-forward.

4. The CIT(A) was challenged for suggesting that invoking section 68 was unnecessary if the income was offered for taxation. The Department argued that the CIT(A)'s interpretation was legally incorrect, highlighting a disagreement over the application of section 68 in cases where income is declared for tax purposes.

Furthermore, during the hearing, the advocate for the assessee pointed out that the tax effect was below the specified limit for appeal filing, as per CBDT circular and section 268A of the Income Tax Act, 1961. The Tribunal noted the binding nature of the Board's instructions on appeal limits, leading to the dismissal of the appeal by the Revenue due to the insufficient tax effect. The Tribunal referenced relevant court decisions supporting the applicability of circular instructions to pending cases, emphasizing adherence to the monetary limit for appeal filing set by the CBDT. Consequently, the appeal by the Revenue was dismissed without delving into the case's merits, based on the applicable instructions and provisions.