2019 (8) TMI 1507 - AT - Income Tax

Tribunal dismisses Revenue's appeal due to tax effect below specified limit in CBDT circular

Income Tax Officer (International Taxation) Kolkata Versus M/s Bata India Ltd.,

The Tribunal dismissed the Revenue's appeal for the assessment year 2003-04 as the tax effect was below the revised monetary limit set out in Circular No. ... Maintainability of appeal - Low tax effect - prescribed minimum tax effect - HELD THAT:- On perusal of the Circular No. 17/2019 dated 08.08.2019 and the materials available on record, we do not see this case falling under any of the exceptions contemplated in the said circular per se. We also find that this circular makes it very clear that the revised monetary limits shall apply retrospectively to pending appeals as well. Hon'ble apex court in Commissioner of Customs vs Indian Oil Corporation Ltd [2004 (2) TMI 66 - SUPREME COURT] has settled the law that CBDT's circulars are very much binding on revenue authorities. We thus hold that this Revenue's appeal raising sole issue of ₹1,02,545/- deserve to be dismissed in terms of low tax effect. We make it clear that it shall very much open for the Revenue to seek necessary rectification in case it is found that any of the appeal involve operations of exception clauses in the tax effect circular as per law. Revenue's appeal is dismissed for involving lower than the prescribed minimum tax effect. Issues:1. Appeal against Commissioner of Income-tax (Appeals)-22 Kolkata's order for assessment year 2003-04 under section 201(1A) of the Income Tax Act, 1961.2. Interpretation of the monetary limits for filing appeals in income-tax cases as per Circular No. 17/2019 dated 08.08.2019.Analysis:Issue 1:The appeal before the Appellate Tribunal ITAT Kolkata was against the order of the Commissioner of Income-tax (Appeals)-22 Kolkata for the assessment year 2003-04 under section 201(1A) of the Income Tax Act, 1961. The Tribunal noted that the tax effect on the disputed additions was less than Rs. 50 lakhs, falling below the revised threshold limit specified in Circular No. 17/2019 dated 08.08.2019. Referring to the Circular, the Tribunal emphasized that the monetary limits for filing appeals in income-tax cases had been enhanced, and appeals below the specified limits should not be pursued. Citing the binding nature of CBDT circulars on revenue authorities as established by the Hon'ble apex court, the Tribunal held that the Revenue's appeal, involving a tax effect of Rs. 1,02,545, should be dismissed due to its low tax impact. The Tribunal clarified that the Revenue could seek rectification if any appeal fell under the exception clauses of the circular.Issue 2:The Tribunal analyzed the provisions of Circular No. 17/2019 dated 08.08.2019 regarding the monetary limits for filing appeals in income-tax cases. It highlighted the requirement for separate calculation of the tax effect for each assessment year in cases involving multiple assessment years. The Circular specified that appeals should only be filed for assessment years where the tax effect exceeded the monetary limit, and no appeal should be pursued for years falling below the limit. The Tribunal observed that the circular applied retrospectively to pending appeals. By examining the circular and the case details, the Tribunal found that the Revenue's appeal, with a tax effect of Rs. 1,02,545, did not meet the prescribed threshold and thus should be dismissed. The Tribunal's decision was based on the clear instructions provided in the circular and the precedent that CBDT circulars are binding on revenue authorities.In conclusion, the Tribunal dismissed the Revenue's appeal for the assessment year 2003-04 due to the tax effect falling below the revised monetary limit specified in Circular No. 17/2019 dated 08.08.2019. The decision was made in accordance with the circular's provisions and the legal principle that CBDT circulars are binding on revenue authorities.