Revenue's Appeal Dismissed Due to Threshold Limit in CBDT Circular

The Tribunal dismissed the Revenue's appeal concerning the disallowance under section 40(a)(ia) of the Income Tax Act for Assessment Year 2013-2014. The appeal was found to be not maintainable as the tax effect was below the limit specified in CBDT Circular No. 17 of 2019. The Circular retrospectively raised the threshold for Revenue appeals to Rs.50 lakhs. The Tribunal upheld the Circular's application to pending cases and dismissed the appeal, allowing for a potential re-verification by the Assessing Officer within the prescribed time frame.

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Issues:
- Disallowance under section 40(a)(ia) of the Income Tax Act
- Maintainability of Revenue's appeal based on CBDT Circular No. 17 of 2019

Analysis:
1. Disallowance under section 40(a)(ia) of the Income Tax Act:
The Revenue appealed against the order of the Commissioner of Income-Tax (Appeals) regarding the disallowance of Rs.1,97,194 under section 40(a)(ia) of the Income Tax Act for Assessment Year 2013-2014. The Revenue contended that the CIT(A) erred in law and on facts in deleting the disallowance. However, during the proceedings, it was brought to light that the tax effect in this case was below the limit prescribed by CBDT Circular No. 17 of 2019 dated 08.08.2019. The Departmental Representative acknowledged this fact, leading to the Tribunal's decision.

2. Maintainability of Revenue's appeal based on CBDT Circular No. 17 of 2019:
The Tribunal observed that the appeal of the Revenue was no longer maintainable due to the CBDT Circular No. 17 of 2019, which raised the limit for cases where the Revenue can challenge relief granted by the CIT(A) to Rs.50 lakhs. This circular had a retrospective effect, applying to all pending appeals. Consequently, the Tribunal dismissed the Revenue's appeal citing the enhanced limit set by the CBDT Circular. However, the Tribunal clarified that if upon re-verification by the Assessing Officer, it is found that the tax effect exceeds Rs.50 lakhs or falls within the exemption clause of the Circular, the Revenue could file a Miscellaneous Application within the prescribed time limit to recall the Tribunal order.

In conclusion, the Tribunal dismissed the appeal of the Revenue due to the low tax effect involved in the case, in compliance with the CBDT Circular No. 17 of 2019. The decision was pronounced on 23rd February 2022 in Ahmedabad.

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