Low tax effect under CBDT appeal limits led to dismissal, with section 115BBE held inapplicable for prior transactions.

The Revenue appeal was held not maintainable because the disputed tax effect, computed at the normal tax rate, fell below the CBDT monetary limit for departmental appeals after the enhanced rate under section 115BBE of the Income-tax Act, 1961 was treated as inapplicable to transactions before 1.4.2017. The Tribunal dismissed the appeal on low tax effect grounds, while recording liberty for the Revenue to seek recall if the matter later fell within any exception to the circular.

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Issues: Whether the Revenue appeal was maintainable in view of the low tax effect circular.

Analysis: The disputed tax effect was computed by applying the normal tax rate instead of the enhanced rate under section 115BBE of the Income-tax Act, 1961, because the enhanced rate was held inapplicable to transactions prior to 1.4.2017. On that basis, the tax effect fell below the monetary limit prescribed by the CBDT circular governing departmental appeals. The order also recorded liberty for the Revenue to seek recall if the case fell within any exception to the circular.

Conclusion: The Revenue appeal was not maintainable and was dismissed.

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