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2018 (10) TMI 790 - AT - Income TaxMonetary limits for filing appeal - low tax effect for filing appeal - maintainability of appeal - Held that - It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Apex Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd. 2004 (2) TMI 66 - SUPREME COURT OF INDIA wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. The appeal under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No.3 dated 11.07.2018. The appeal filed by the Department, against the impugned order of the Ld. CIT(A), is contrary to the policy decision of the Department and as such the appeal filed by the Department is dismissed in limine.
Issues:
1. Appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) - jurisdiction and monetary limits. 2. Circular issued by CBDT increasing monetary limits for filing appeals. 3. Application of revised monetary limits retrospectively. 4. Binding nature of Circulars issued by CBDT on the Revenue. 5. Dismissal of the appeal filed by the Revenue due to non-compliance with the Circular. Analysis: 1. The appeal by the Revenue was against the order of the Commissioner of Income Tax (Appeals) and was related to the Assessment Year 2010-11. The appeal was filed under section 153A/143(3) of the Income Tax Act, 1961. The CBDT had recently issued Circular No. 3/2018 dated 11.07.2018, increasing the monetary limits for filing appeals before the Income Tax Appellate Tribunal and higher courts to reduce litigation. 2. The Circular specified new monetary limits for filing appeals before different forums. It clarified that appeals should not be filed solely based on exceeding the monetary limits and should be decided on the merits of the case. The Circular defined 'tax effect' as the difference in tax on the total income assessed and the tax if income was reduced by the disputed amount. It also outlined the inclusion of surcharge and cess in the tax effect calculation. 3. The Circular stated that the revised monetary limits would apply retrospectively, including to pending appeals below the specified tax limits. In the case at hand, the tax effect was less than the revised limit of ?20,00,000, even though the appeal had been filed before the new Circular came into effect. 4. The Tribunal emphasized that Circulars issued by the CBDT are binding on the Revenue. Referring to a Supreme Court decision, it reiterated that the Revenue must adhere to the Circulars and cannot claim they are invalid or contrary to the statute. Therefore, the appeal filed by the Revenue against the Circular's guidelines was dismissed. 5. The Tribunal held that the appeal by the Revenue was contrary to the policy decision of the Department due to non-compliance with the Circular. It was decided that the appeal did not meet the requirements set forth in the Circular, and thus, it was dismissed. The Revenue was given the option to approach the Tribunal if they later found the tax effect exceeded the limit or if there were other justifiable reasons for the appeal. In conclusion, the Tribunal dismissed the appeal by the Revenue for not adhering to the revised monetary limits set by the CBDT Circular, emphasizing the binding nature of Circulars on the Revenue and the need to comply with policy decisions.
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