2017 (10) TMI 1152

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....No. 34/VIZ/2016 2. At the outset, learned counsel for the assessee has submitted that tax effect involved in this appeal is below Rs. 10 lakhs and as per the CBDT Circular No. 21/2015, dated 10/12/2015 the Revenue is bound to withdraw the appeal. Learned counsel further submitted that the above referred circular simply mentioned that "tax", which does not include surcharge and education cess etc. and submitted that appeal filed by the Revenue, may be dismissed. 3. On the other hand, learned Departmental Representative has submitted that tax effect is including surcharge, education cess etc. and in this appeal, tax effect is above Rs. 10 Lakhs and hence, appeal is permissible for adjudication. 4. We have heard both the sides, peruse....

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....se (4) of Instruction No.5 of 2008 dated 15th May, 2008 of CBDT, tax effect is defined as under:- "4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is intended to be filed (hereafter referred to as "disputed issues"). However, the tax will not include any interest thereon. Similarly, in loss cases notional tax effect should not be taken into account. In the case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against." Nothing has been mentioned in the above definiti....

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....on cess' as well, if there was any intention to include them in the word 'tax'. Thus, we respectfully agree with the decision taken by the Channel Bench. In our view, surcharge and education cess shall not be include in word 'tax' for the purpose of examining of tax effect as envisaged in circular of Board dated 10th December 2015 No. 21/2015. Thus, the tax effect being less than 10 lakhs, impugned appeal filed by the revenue is not maintainable and therefore same is hereby dismissed. Our order has no effect on the merits of this case." In view of this and keeping in mind the principles laid down by the Hon'ble Delhi High Court in the case of Dalmia Cement (Bharat) ltd., we are of the opinion that surcharge ....

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....10% to 5% in the case of Tangudu Jogisetty in ITA No.96/Vizag/2016 by order dated 2.6.2016. 10. On the other hand, the Ld. D.R. strongly supported the orders passed by the authorities below. 11. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The only issue involved in this appeal is estimation of profit in respect of IMFL business carried by the assessee. In this respect, the coordinate bench of the Tribunal in the case of Tangudu Jogisetty (supra) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the asses....

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....uments of the assessee for the reason that the A.O. has estimated the net profit by relying upon the decision of A.P. High Court in the case of CIT Vs. R. Narayana Rao in ITA No.3 of 2003 which is rendered under different facts. The A.P. High Court has considered the case of an arrack dealer, whereas, the assessee is into the business of dealing in IMFL. Therefore, we are of the view that the A.O. was not justified in relying upon the judgement, which was rendered under different facts to estimate the net profit. On the other hand, the Ld. A.R. for the assessee, relied upon the decision of ITAT, Visakhapatnam bench in the case of T. Appalaswamy Vs. ACIT in ITA No.65 & 66/Vizag/2012. We have gone through the case laws relied upon by the asse....