2019 (7) TMI 2031 - AT - Income Tax

Tax Appeal Dismissed: Revenue's Case Falls Below Rs. 20 Lakh Threshold Set by CBDT Circular, Emphasizing Compliance.

The Tribunal dismissed the Revenue's appeal regarding the disallowance of maintenance charges, as the tax effect was below the Rs. 20 lakh threshold set ... Maintainability of appeal on low tax effect in ITAT - Disallowance of Maintenance Charges deleted by CIT(A) - HELD THAT:- Admittedly, the tax effect in the Departmental Appeal is less than Rs.20 lakhs. Vide Circular No. 3 of 2018 dated 11.07.2018 issued by Central Board of Direct Taxes (CBDT) under section 268A of the I.T. Act, it has been directed that Department shall not file appeal before the Tribunal in case where the tax effect does not exceed the monetary limit of Rs.20 lakhs. It is also directed that this instruction will apply retrospectively to the pending appeals and appeals to be filed henceforth in the Tribunal. It is also directed in this Circular, that pending appeals below the specified tax effect may be withdrawn/not pressed. CIT(DR), who appeared on behalf of Revenue, did not press the appeal in view of the aforesaid Circular of CBDT. We may also note that this appeal of Revenue would not fall within the exceptions provided in the aforesaid Circular. In the result, the Departmental Appeal is not maintainable, in view of aforesaid CBDT Circular. The Appeal of Revenue is dismissed as withdrawn/not pressed by the Ld. CIT(DR). Revenue will be at liberty to file a miscellaneous application seeking recall of this order for restoration of the appeal, if it is found that the appeal of Revenue is not covered by aforesaid CBDT Circular. Issues:1. Disallowance of Maintenance Charges2. Tax effect in Departmental AppealIssue 1: Disallowance of Maintenance ChargesThe appeal was filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) for Assessment Year 2011-12. The Revenue contended that the Ld. CIT(A) erred in deleting the disallowance of Maintenance Charges of Rs. 40,73,080 without appreciating the merits of the issue and merely relying on the predecessor CIT(A)'s order for the previous assessment years. However, the tax effect in the Departmental Appeal was less than Rs. 20 lakhs. As per Circular No. 3 of 2018 issued by CBDT, appeals where the tax effect does not exceed Rs. 20 lakhs should not be filed before the Tribunal. The Ld. CIT(DR) did not press the appeal in light of this circular, and the Tribunal held that the Departmental Appeal was not maintainable under the circular. The appeal of Revenue was dismissed as withdrawn/not pressed, with the option for Revenue to file a miscellaneous application for restoration if not covered by the circular.Issue 2: Tax effect in Departmental AppealThe Circular No. 3 of 2018 issued by CBDT under section 268A of the I.T. Act set a monetary limit of Rs. 20 lakhs for filing appeals before the Tribunal. The circular directed that appeals below this specified tax effect may be withdrawn/not pressed. In this case, the tax effect in the Departmental Appeal was less than Rs. 20 lakhs, leading to the Ld. CIT(DR) not pressing the appeal. The Tribunal, following the circular's instructions, dismissed the appeal of Revenue as withdrawn. The circular applied retrospectively to pending appeals and future filings, with the option for Revenue to seek restoration if the appeal was not covered by the circular.This judgment highlights the significance of tax effect in determining the maintainability of appeals before the Tribunal as per CBDT circulars. It emphasizes the adherence to monetary limits set by the circular for filing appeals and the consequences of not meeting such limits, leading to the dismissal of appeals. The case demonstrates the procedural aspects and considerations involved in handling appeals based on tax effect criteria, ensuring compliance with CBDT directives for efficient dispute resolution.