ITAT dismisses Revenue's appeal on tax effect calculation, upholding exclusion of surcharge and cess.

The ITAT dismissed the Revenue's appeal against the ITAT order in ITA No. 418/Hyd/2014 as the tax effect did not exceed the mandatory limit of Rs. 10 lakhs when surcharge and education cess were excluded from the calculation. Despite objections regarding belated filing, the ITAT upheld that the tax effect should not include surcharge and cess, in line with previous judgments. The appeal was deemed not maintainable and thus dismissed, with the ITAT emphasizing the exclusion of surcharge and education cess in determining the tax effect.

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Issues:
- Appeal against order of ITAT in ITA No. 418/Hyd/2014
- Dispute over tax amount exceeding mandatory limit of Rs. 10 lakhs
- Inclusion of surcharge and education cess in tax calculation

Analysis:
1. The appeal was filed by the Assessing Officer against the ITAT order in ITA No. 418/Hyd/2014, but the Revenue treated it as withdrawn/not pressed due to not meeting the mandatory limit of Rs. 10 lakhs for appeal, as per CBDT Circular No. 21/2015.

2. The Assessing Officer argued that the tax paid was Rs. 10,19,700, exceeding the limit, while the Assessee's counsel contended that the tax effect should exclude surcharge and education cess, citing relevant case laws.

3. The Assessee's counsel referred to various decisions, including the Delhi High Court and other ITAT benches, to support the exclusion of surcharge and cess from the tax effect calculation, emphasizing that tax should not include surcharge and cess as per the definition of tax.

4. The ITAT analyzed the issue and concurred with the Assessee's argument, stating that surcharge and education cess should not be included in tax calculation for determining the tax effect. The ITAT referred to previous judgments and upheld that the tax effect was below Rs. 10 lakhs, rendering the appeal by the Revenue not maintainable and thus dismissed.

5. Despite objections raised by the Assessee's counsel regarding the belated filing of the MA by the Revenue, the ITAT did not consider it relevant due to the lack of merit in the MA concerning the tax effect.

6. Consequently, the ITAT dismissed the MA filed by the Revenue, emphasizing that the tax effect calculation should exclude surcharge and education cess, leading to the appeal not meeting the mandatory limit and thus being dismissed.

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