2018 (2) TMI 1360 - AT - Income Tax

Definition of Admitted Tax in Appeal Admission Clarified by ITAT Hyderabad

The ITAT Hyderabad clarified that interest is not included in the definition of admitted tax for appeal admission. The CIT(A) was directed to consider the ... Payment of admitted tax as condition precedent for admission of appeal - interpretation of 'tax' excluding 'interest' for the purpose of admission under section 249(4) - application of Section 140A regarding self-assessment and interest adjustment - jurisdictional excess in dismissing appeal in limine where admitted tax has been paidPayment of admitted tax as condition precedent for admission of appeal - interpretation of 'tax' excluding 'interest' for the purpose of admission under section 249(4) - Admitted tax for the purpose of Section 249(4) does not include interest and payment of the admitted tax (exclusive of interest) satisfies the condition precedent for admission of appeal. - HELD THAT: - The Tribunal held that the statutory requirement in Section 249(4) is confined to payment of the admitted tax component disclosed in the return and does not extend to interest, which is separately defined and treated under the Act. Reliance was placed on the principle of statutory construction that definitions in the Act distinguish 'tax' from 'interest', and on the decision of the Bombay High Court in CIT v. Manoj Kumar Beriwal which held that deposit of tax for admission under Section 249(4) does not include interest under sections such as 234B/234C. The Tribunal observed that Section 140A likewise treats tax and interest distinctly and the explanatory proviso to self-assessment provisions contemplates separate computation and application of interest. Accordingly, non-payment of any further interest calculated after assessment did not disentitle the assessee where the admitted tax had been paid, and the First Appellate Authority erred in treating unpaid interest as a bar to admission of the appeal. [Paras 7]What is requisite under Section 249(4) is payment of the tax component only; the appeal is maintainable as the admitted tax had been paid.Jurisdictional excess in dismissing appeal in limine where admitted tax has been paid - appeal restored for adjudication on merits - Whether the CIT(A) lawfully dismissed the appeal in limine despite the admitted tax having been paid; the CIT(A)'s dismissal was set aside and the appeal restored for decision on merits. - HELD THAT: - The Tribunal recorded that it had earlier directed the First Appellate Authority to admit and decide the appeal on merits after verifying payment of tax/records. Notwithstanding those directions, the CIT(A) again dismissed the appeal in limine on the basis of alleged unpaid interest and calculations not placed on record. The Tribunal held that the CIT(A) exceeded jurisdiction by refusing to admit the appeal where the admitted tax had been paid, and that the matter should be remitted to the CIT(A) for fresh adjudication on the merits of the grounds raised, after taking on record relevant proof and affording opportunity of hearing. [Paras 3, 4, 8]Impugned order of the CIT(A) is set aside; the appeal is restored to the file of the CIT(A) for disposal on merits.Final Conclusion: The Tribunal allowed the appeal for statistical purposes, holding that payment of the admitted tax (exclusive of interest) fulfils the condition precedent under Section 249(4), setting aside the CIT(A)'s dismissal and restoring the matter to the CIT(A) for adjudication on merits. Issues:1. Delay in filing the appeal and condonation of the delay.2. Disallowance of expenditure claims and taxation of share of consideration.3. Interpretation of provisions of Section 249(4) regarding payment of admitted tax for admission of an appeal.4. Dismissal of appeal by CIT(A) based on non-payment of interest along with admitted tax.5. Whether admitted tax includes interest as per Section 249(4) and Section 140A.6. Jurisdiction of CIT(A) in dismissing the appeal in limine.Issue 1: Delay in filing the appeal and condonation of the delay:The appeal was filed with a delay of 19 days, and the delay was condoned by the ITAT after considering the reasons provided by the assessee and the arguments presented.Issue 2: Disallowance of expenditure claims and taxation of share of consideration:The AO disallowed expenditure claims and taxed the share of consideration received from a company in the assessment. The appeal before the CIT(A) was dismissed, leading to further appeals and reconsideration of the case.Issue 3: Interpretation of provisions of Section 249(4) regarding payment of admitted tax:The ITAT directed the CIT(A) to consider the issue of payment of admitted tax for admission of an appeal. The ITAT emphasized that the payment of admitted tax is a mandatory condition for appeal admission and should not include interest.Issue 4: Dismissal of appeal by CIT(A) based on non-payment of interest:The CIT(A) dismissed the appeal again, citing non-payment of interest along with admitted tax. The appellant argued that only admitted tax was required to be paid, and the CIT(A) should have considered the case on merits.Issue 5: Whether admitted tax includes interest as per Section 249(4) and Section 140A:The ITAT clarified that 'admitted tax' does not include interest, as per Section 249(4). The CIT(A)'s decision was overturned based on this interpretation, and the appeal was restored for consideration on its merits.Issue 6: Jurisdiction of CIT(A) in dismissing the appeal in limine:The CIT(A) exceeded jurisdiction by dismissing the appeal based on non-payment of further interest, which was not clearly defined or calculated. The ITAT emphasized that the appeal should have been decided on its merits and not dismissed based on technicalities.In conclusion, the ITAT Hyderabad clarified the interpretation of provisions related to the payment of admitted tax for appeal admission, emphasizing that interest is not included in the definition of admitted tax. The CIT(A) was directed to consider the appeal on its merits, and the appeal was allowed for statistical purposes. The judgment highlighted the importance of considering appeals based on substantive issues rather than technicalities.