Recurring substantial question of law saves low tax effect appeals; later CBDT instruction applies prospectively only.

Departmental appeals below the prescribed tax effect were maintainable where the dispute raised a substantial and recurring question of law, because the exception in CBDT Instruction No. 2 of 2005 applied to issues likely to recur across assessment years and cases. The later CBDT Instruction No. 5 of 2008 did not govern appeals filed before 15 May 2008, as it applied only prospectively and preserved the instruction in force on the filing date. The Revenue's appeals were entertained, the contrary Tribunal order was set aside, and the matters were remitted for decision on merits.

---

---

Issues: (i) Whether departmental appeals below the prescribed tax effect were maintainable under CBDT Instruction No. 2 of 2005 because the dispute raised a substantial and recurring question of law. (ii) Whether CBDT Instruction No. 5 of 2008 applied to appeals already filed before 15 May 2008 so as to render them not maintainable.

Issue (i): Whether departmental appeals below the prescribed tax effect were maintainable under CBDT Instruction No. 2 of 2005 because the dispute raised a substantial and recurring question of law.

Analysis: The exception in clause (3) of Instruction No. 2 of 2005 permits appeals to be pursued despite the monetary limit where the issue involves a substantial question of law of importance or a question likely to recur in the same or similar cases. The dispute regarding taxability of urban land with a semi-constructed building was treated as a recurring legal issue having cumulative impact across assessment years and across cases.

Conclusion: The appeals were held to be maintainable under Instruction No. 2 of 2005 notwithstanding the low tax effect.

Issue (ii): Whether CBDT Instruction No. 5 of 2008 applied to appeals already filed before 15 May 2008 so as to render them not maintainable.

Analysis: Clause (11) of Instruction No. 5 of 2008 limits its application to appeals filed on or after 15 May 2008 and preserves the governing effect of the instruction in force on the date of filing for earlier appeals. Since the appeals had been filed before that date, the later instruction did not control their maintainability. The Court also found that the exception clause under the earlier instruction continued to apply.

Conclusion: Instruction No. 5 of 2008 did not bar the pending appeals.

Final Conclusion: The Revenue's appeals were entertained, the Tribunal's contrary order was set aside, and the matters were sent back to the Tribunal for decision on merits.

Ratio Decidendi: Where a departmental appeal involves a recurring substantial question of law falling within the exception to the CBDT monetary-limit instruction, maintainability is not defeated by low tax effect, and a later instruction applies only prospectively if its text so provides.

---