2024 (7) TMI 1090 - HC - Income Tax

Monetary limit to file appeal before High Court - Denial of exemption to the Trust - HELD THAT - We have to see whether the monetary limit in any of these appeals is breached through the filing of these appeals. We find in this context that the tax effect in the appeals pertaining to assessment years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 are well below the monetary limit of Rs. 1 crore specified in the circulars referred above. Without any further discussion therefore, we deem it appropriate to dismiss the said I.T appeals as not maintainable in view of the Circulars referred above that are binding on the department in view of the judgment in S.R.M.B Diary Farming (P) Ltd. 2017 (11) TMI 1494 - SUPREME COURT . For AY 2011-12 and 2012-13 No doubt, the said appeals involve a tax effect exceeding Rs. 1 crore - Additions to be made to the income of the Trust and since the more fundamental issue as regards the availability of exemption to the assessee Trust, consequent to its registration u/s 12AA of the Act has already been sustained - Since the issue of registration u/s 12AA of the Act, and the availability of exemption to the assessee-Trust, has already been answered in their favour by the order of the Tribunal 2017 (1) TMI 1671 - ITAT COCHIN supra, we are of the view that the aforesaid questions of law raised by the revenue in the appeals have to be answered against the revenue and in favour of the assessee

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal regarding assessments for the years 2006-07 to 2012-13.
2. Validity of denial of exemption and additions to the taxable income of the Trust.
3. Applicability of Circulars issued by the Central Board of Direct Taxes on the maintainability of appeals based on tax effect.
4. Legal questions raised by the revenue regarding additions to the income of the Trust for the assessment years 2011-12 and 2012-13.

Analysis:
1. The appeals by the revenue challenge the order of the Income Tax Appellate Tribunal related to assessments for the years 2006-07 to 2012-13. The respondent, a Trust engaged in educational activities, faced proceedings for cancellation of registration and addition to taxable income post a search conducted in 2011. The assessing officer contended that benefits under Section 11 of the Act were not available due to non-compliance with Section 13 conditions. The First Appellate Authority upheld the denial of exemption and partially sustained additions, except for the year 2008-09. The Tribunal's order in favor of the assessee regarding exemption became final as the revenue did not appeal against it.

2. The High Court considered objections raised by the respondent's counsel regarding Circulars issued by the Central Board of Direct Taxes. The Circulars set monetary limits for appeals by the revenue, with the Supreme Court ruling their applicability to pending appeals. The Court found that for certain assessment years, the tax effect was below the specified limit, leading to the dismissal of those appeals. However, for the years 2011-12 and 2012-13, where the tax effect exceeded the limit, the fundamental issue of exemption to the Trust was already resolved in favor of the assessee by the Tribunal's order.

3. The revenue raised legal questions in appeals related to the assessment years 2011-12 and 2012-13. The issues included the addition of fees based on seized material, restriction of additions, and reliance on Board Circulars. As the Tribunal had already ruled in favor of the assessee regarding exemption, the High Court decided to dismiss certain appeals and answer the questions of law against the revenue and in favor of the assessee in the remaining appeals. The judgment highlighted the importance of the Tribunal's previous order on exemption in determining the outcome of the legal questions raised by the revenue.