TaxTMI 
TaxTMI 
2018 (8) TMI 749
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....rge his onus to prove the identity, genuineness and capacity of the creditors. iii. The ld. CIT(A) has erred in law in ignoring the decision of Hon'ble Kerela High Court in the case of Unneeri Kutty which has been affirmed by the Hon'ble Supreme Court in the case in (SLP (Civil) No. 4789 of 1993) 201 ITR 23 (st.). 2. We have considered the submissions of both the parties and perused the material on record. It is noticed that the tax effect involved in the departmental appeal is less than Rs. 20,00,000/- therefore, the department ought not to have filed the appeal in view of the Circular No. 3/2018 dated 12.7.2018. 3. After considering the submissions of both the parties and the material available on record, it is noticed that Section 268A has been inserted by the Finance Act, 2008 with retrospective effect from 01/04/99. The said section 268 of the Act provides that the Board may issue instruction or directions to the other income-tax authorities fixing monetary limits for not filing the appeals before the Appellate Tribunal or the Courts, said instructions/directions are binding on the income tax authorities. 4. It is noticed that the CBDT has issued Circular No.....
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....o be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeals shall be filed in respect of all such assessment years even if the tax effect is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which tax effect exceeds the monetary limit prescribed. In case where a composite order/judge....
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....has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value and also bring to the notice of the Tribunal/ Court the provisions of sub section (4) of section 268A of the Income-tax Act, 1961 which read as under : "(4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-section (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case." 9. As....
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....n pare 3 above may be withdrawn/ not pressed. 14. The above may be brought to the notice of all concerned. 15. This issues under Section 268A of the Income-tax Act 1961." 5. From Clause 12 & 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than Rs. 20,00,000/-. These instructions are operative retrospectively to the pending appeals. 6. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal. 7. In its cross objection, the only ground raised by the assessee read as under:- "i. The ld. CIT(A) has erred in law as well as on fact by allowing the amount of Rs. 1,27,284/- out of disallowance of Rs. 12,36,720/- made under section 43B ignoring the fact that it has been levied on account of Non-registration with VAT Authorities which being mandated by law and an expenditu....
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.... it was an infringement of law and not liable to be written off in the books of assessee. 10. Being aggrieved the assessee carried the matter to the learned CIT(A) and submitted as under:- "That the said expense is a levy of state tax caused due to the Turnover made by the appel lant . The detai ls of these expenses were submi t ted by us in our let ter dt . 28th March, 2013 alongwi th al l the documentary evidences, the copy of which are also being submi t ted before your good sel f , which comprises of the Ledger A/c of the said expense and the chart showing the bi l l wise entries of the tax deduct ions. That this tax is not a tax which has arisen on the income of the appel lant but i t has arisen on the Works executed by the Appel lant . The State taxes , l ike Sales tax/VAT are the part of cost of goods and has to be considered whi le declaring the value of goods. Simi larly the WCT is also a state tax and a bonaf ide cost to the Assessee. That the Content ion of the Ld AO that the Appel lant might get the Refund of the said taxes deducted by the Customers of the Appel lant , does not hold good as the process, of claiming Refund is a long process , u....
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.... i . Labour Charges for execut ion of Works. ii . Amount paid to sub contractor for labour and services. iii . Charges paid for obtaining on hire the equipment or machinery used for execut ion of works contract . iv. Charges for planning and designing and archi tect's fees. v. Cost of consumable used in execut ion of works contract . vi . Cost of establ ishment of the contractor to the extent i t is relatable to supply of labour and services. vii . Other simi lar expenses relat ing to supply of labour and services. viii . Prof i ts earned by contractor to the extent i t relates to supply of labour and services. 12. It was stated that after deducting the above items, the remaining figures would be the taxable turnover of the contractor. It was also stated that the said scheme was just like the provisions contained u/s 14AD of the Act where a contractor, whose tax has been deducted under the Act may opt for deemed income @ 8% of the turnover. In that case he shall not be obliged to maintain the books of accounts and produce before an AO. Similarly, under the VAT provision, a contractor whose taxes had been deducted, if he di....
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.... as turnover or sales and debited the amount on account of WCT in the manufacturing / profit & loss account. The learned CIT(A) was of the view that the allowability was governed by the provisions of Section 43B of the Income Tax Act as it was in the nature of tax and to be allowed in the year of payment to the respective authorities. He also pointed out that the WCT component of Rs. 11,09,436/- had been paid to the respective State Governments in respective financial years 2005-06 to 2008-09 by the customers on behalf of the assessee, therefore, the claim of the assessee for WCT of Rs. 11,09,436/- was not an allowable expenditure for A.Y. 2010- 11 under section 43B of the Act, however, the amount of Rs. 1,27,284/- (Rs. 12,36, 720/- (-) Rs. 11,09,436/-) relating to the assessment year 2010-11 was held as allowable under section 43B of the Act. 14. Now the assessee is in appeal. 15. The learned counsel for the assessee reiterated the submissions made before the authorities and further submitted that the amount which was deducted by the customers had been shown by the assessee in its balance-sheet, a reference was made to page no. 4 of the assessee's paper book which is a copy ....