9911796707
Advanced Search 
TMI Blog2012 (4) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel that the order of the Tribunal is completely erroneous in as much as the tax effect in the present Tax Appeal at Rs. 18,83,616/- Basing on the notional tax effect, it relied upon the decision of the Apex Court in case of Jt. CIT v. Saheli Leasing & Industries Ltd. [2010] 324 ITR 170/191 Taxman 165 (SC). Accordingly, he argued that for determination of the tax effect, notional tax effect would need to be given its importance. Revenue while challenging the order of Tribunal proposed following substantial question of law for our consideration : "Whether the Appellate Tribunal is right in law and on facts in dismissing the Appeal of the revenue on the ground of low tax when the tax effect was Rs. 18,83,616 (Notional), which exceeded the monetary limit prescribed by the Board ?" 4. It is candidly pointed out to us that in Tax Appeal No. 1601 of 2009 and allied appeals. Identical Question of law, on low tax effect has been considered by this Bench. Therefore, the issue proposed being identical does not require any independent examination. It would be worthwhile to reproduce some of the relevant findings for the purpose of present Tax Appeal. 16. The question can be approached in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a return filed [ in accordance with the provisions of sub-section (3) of section 139], shall be carried forward and set off under sub-section (1) of Section 72 or sub-section (2) of section 73 or sub-section (1) [or sub-section(3)] of section 74 [ or sub-section (3) of section 74A]." 19. Section 139(3) of the Act pertains to return of loss and reads as under:- "(3) If any person who has sustained a loss in any previous year under the head "Profit and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) [or sub-section (3)] of section 4, [or sub-section (3) of section 74A], he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1)." Section 157 of the Act provides for intimation of loss and reads as under:- "157. When, in the course of the assessment of the total income of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such Sections. Thus, not only the computation of loss but different headings under which such loss is allowed, would also have to be judged and intimated by the Assessing Officer. 22. Because the loss suffered can be set off or carried forward in the subsequent years for a specified period, as provided in different provisions the Legislature requires that the assessee should, even while declaring loss, not make unreal claims. It is in this respect that sub-clause (iv) of clause (c) of Explanation 2 of Section 147 creates a deeming fiction that even a case of excessive loss would be deemed to be a case where income chargeable to tax has escaped assessment. 23. We may recall that in the case of Gold Coin Health Food P. Ltd. (supra), the Apex Court while overruling the previous decision in the case of Virtual Soft Systems Ltd. v. CIT [2007] 289 ITR 83/159 Taxman 155 (SC) held that even in a case where claim of loss is found to have been wrongly made, by virtue of Explanation 4 of Section 271(1)(c)(iii), penalty can be levied. 24. From the above statutory provisions, it can be seen that merely on the ground that even if the Assessing Officer's order is restored, the net result would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal or application for reference by any income-tax authority under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of - (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. (4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal or application before the Tribunal or the court. It is also true that when the hon'ble Supreme Court or the territorial High Court have declared the law on a question, it is not open to the Tribunal to direct that the circular issued by the Board prescribing the monetary limit should be given effect to and not the decision of the hon'ble Supreme Court or the territorial High Court. It is, however, equally true that the Tribunal's attention must be drawn by the Departmental representative to such decision of the hon'ble Supreme Court or the High Court. An objection must be raised by the Departmental representative." 28. It is thus not possible for the Revenue to deny nor was it so done before us that Revenue's appeals before the Tribunal must be regulated by the Board's circulars issued from time to time laying down besides other conditions, monetary limits for preferring such appeals. The question is whether the Board's instructions, prevented the department from preferring appeal in case of loss irrespective of the difference of the quantum between the loss assessed by the Assessing Officer and the CIT (Appeals). To answer this question, it would be necessary to refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een decided by the Board that appeals will henceforth be filed only in cases where the tax effect exceeds the revised monetary limits given hereunder:- Sl. No. Income-tax Tax effect (i) Appeal before Appellate Tribunal Rs. 2,00,000/- (ii) Appeal u/s. 260A Rs. 4,00,000/- (iii) Appeal before the Supreme Court Rs. 10,00,000/- The monetary limits were, however, to be ignored in certain exceptional cases specified in para 3 of the said circular, which reads as under:- "3. The Board has also decided that in cases involving substantial question of law of importance as well as in cases where the same question of law will repeatedly arise, either in the case concerned or in similar cases, should be separately considered on merits without being hindered by the monetary limits." Barring above modifications, para 4 of the Circular provided that the instructions dated 27.3.2000 and 29.6.2000 will continue to operate. 32. Yet another circular dated 16.7.2007 came to be issued by the Board. However, with contents of such circular we are not directly concerned. 33. Another circular, which came to be issued by the Board on 15.5.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal 3,00,000/- 2. Appeal u/s. 260 A before High Court 10,00,000/- 3. Appeal before Supreme Court 25,00,000/- It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. For this purpose, "tax effect" means the difference between the tax on the total income assessee and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed(hereinafter referred to as "disputed issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against." 34. From the above circulars, two f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at appeals will be filed only in cases where tax effect exceeds the revised monetary limits i.e. Rs. 2,00,000/- for the appeal to be file before the appellate Tribunal Rs. 4,00,000/- for the appeal or reference before the High Court and Rs. 10,00,000/- in case of appeals to the Supreme Court. Such limit came to be revised by Circular dated 24.10.2005 which provided for monetary limits of tax effect of Rs. 2,00,000/-, Rs. 4,00,000/- and Rs. 10,00,000/- for appeals to the Tribunal, High Court and the Supreme Court respectively. None of these circulars provided that by virtue of assessment of loss by the Assessing Officer, different from that declared by the assessee, even if the possible tax effect is huge, no appeals should be presented before the Tribunal, High Court or the Supreme Court; merely because ultimately the income of the assessee was negative. We have no hesitation in coming to the conclusion that none of the circulars presented before us intended to bar the tax appeals even where potential tax effect would be enormous, simply because in the year in question, the assessee had earned negative income. 37. The issue can be looked from a slightly different angle. In absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the view of the Tribunal that even if the order of the Assessing Officer is upheld the tax recovery so far as the revenue is concerned would be nil. In the event the question has any impact on subsequent years, we leave it open to the revenue to raise it in the succeeding years, if need arises. 6. Learned counsel for the revenue submits that the tax effect is not required to be seen but the tax effect on the issue involved is to be seen. This is precisely what the Tribunal has done. We do not find any error in the view taken by the Tribunal." 41. We do not find that various provisions and authorities brought to our notice were cited before the Delhi High Court. Similarly, in the case of Nanakram Jaisinghania (supra) Delhi High Court affirmed the view of the Tribunal making following observations:- "2. Learned counsel for the appellant submits that the Central Board of Direct Taxes has issued OM dated May 15, 2008, which is Instruction No.5 of 2008 and as per these instructions, in loss cases, notional tax effect is to be taken into account. The learned counsel, however, conceded that these instructions are applicable in respect of those appeals preferred after the issuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
