2010 (9) TMI 1132 - HC - Income Tax

High Court corrects Tribunal's error in tax appeal, emphasizes accurate tax effect calculation for fair assessment

Commissioner Of Income Tax Versus Speciality Coatings and Lamination Ltd

The High Court considered the appeal filed by Revenue below the prescribed tax limit set by the Central Board of Direct Taxes. The Court found that the ... - Issues involved: Determination of tax effect for appeal filed by Revenue below the limit prescribed by Central Board of Direct Taxes.Summary:The High Court considered the substantial question of law regarding the justification of the Tribunal in dismissing the Revenue's appeal due to the tax effect being below the limit set by the Central Board of Direct Taxes. The Revenue contended that the Tribunal's calculation of tax effect was incorrect and highlighted the circular to demonstrate the actual tax effect. On the other hand, the counsel for the assessee argued that the tribunal had applied its mind and the departmental representative failed to counter the contentions raised. The Court referred to the circular defining 'tax effect' as the difference in tax on total income assessed and the tax if income related to the issue in appeal was reduced. Notional tax effect should be considered in loss cases, and in penalty orders, it refers to the penalty amount deleted or reduced. The Court also mentioned the tribunal's order in a similar case involving Peerless Developers, where the tax effect was below the limit specified by the Board's instructions, leading to the appeal's dismissal. Ultimately, the Court allowed the appeal, set aside the tribunal's order, and remitted the matter back to the tribunal to determine the tax effect accurately and proceed accordingly, emphasizing adherence to the law. No costs were awarded in this decision.