2015 (9) TMI 597 - AT - Income Tax

Disallowance deleted by CIT(A) - CIT(A) deleting the addition of excess provision written back by the assessee in the profit and loss account and not offered for tax in this year - Monetary limits for the Revenue to file appeals - Held that - Considering proposition laid down by the hon ble High Court in the case of CIT v. Smt. Vijaya V. Kavekar 2013 (2) TMI 451 - Bombay High Court we hold that in view of the revised Instruction issued by the Central Board of Direct Taxes under which, the monetary limit for filing the appeals before the appellate authorities, Tribunals has been revised and fixed at ₹ 4 lakhs, i.e., only appeals with tax effect exceeding ₹ 4 lakhs were maintainable. In the present appeal filed by the Revenue, the monetary limit admittedly, is less than ₹ 4 lakhs. In view of Instruction No. 5 of 2014 which are applicable not only to the new appeals to be filed by the Revenue, but also to the appeals pending before the Tribunal, we dismiss all the appeals filed by the Revenue because of small tax effect.- Decided against revenue

Issues:
- Disallowance of expenses related to closed business
- Addition of excess provision not offered for tax
- Applicability of revised monetary limits for filing appeals

Issue 1: Disallowance of expenses related to closed business
The appeal filed by the Revenue challenged the deletion of disallowance amounting to Rs. 7,46,488 by the Commissioner of Income-tax (Appeals). The Revenue contended that the expenses attributable to the business, which was closed during the year, should have been disallowed. However, the Appellate Tribunal noted that the tax effect in the present appeal was below Rs. 4 lakhs, as admitted by the Departmental representative. Referring to the hon'ble Bombay High Court's decision in CIT v. Smt. Vijaya V. Kavekar, the Tribunal emphasized that the revised monetary limits for filing appeals were applicable to pending cases as well. Therefore, based on the revised Instruction No. 5 of 2014, which set the monetary limit at Rs. 4 lakhs, the Tribunal dismissed the appeal due to the small tax effect.

Issue 2: Addition of excess provision not offered for tax
The second ground of appeal raised by the Revenue was related to the deletion of the addition of excess provision written back by the assessee in the profit and loss account. The Revenue argued that the amount not offered for tax in the current year should not have been deleted. However, similar to the first issue, the Tribunal applied the revised monetary limits set by Instruction No. 5 of 2014. The Tribunal held that only appeals with a tax effect exceeding Rs. 4 lakhs were maintainable. As the tax effect in the present appeal was below the prescribed limit, the Tribunal dismissed all appeals filed by the Revenue.

Issue 3: Applicability of revised monetary limits for filing appeals
The central issue in this judgment revolved around the applicability of the revised monetary limits for filing appeals set by the Central Board of Direct Taxes. The Tribunal extensively discussed the provisions of section 268(1) of the Income-tax Act, empowering the Board to issue instructions fixing monetary limits for Revenue appeals. Citing the hon'ble Bombay High Court's decision in CIT v. Smt. Vijaya V. Kavekar, the Tribunal concluded that the revised instructions were applicable not only to new appeals but also to pending cases. Therefore, the Tribunal applied the revised monetary limit of Rs. 4 lakhs and dismissed the Revenue's appeals due to the tax effect being below the prescribed threshold.

This judgment showcases the significance of adhering to revised monetary limits for filing appeals, as set by the Central Board of Direct Taxes. The Tribunal's decision was guided by legal precedents and statutory provisions, emphasizing the importance of considering the tax effect in determining the maintainability of appeals. The dismissal of the Revenue's appeals underscores the strict adherence to monetary thresholds in tax matters, ensuring efficient utilization of judicial resources and preventing the burdening of courts and tribunals with cases below the prescribed limits.

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