TaxTMI 
TaxTMI 
2018 (9) TMI 624
X X X X Extracts X X X X
X X X X Extracts X X X X
....861700/- on a/c of unascertained provision of gratuity and Rs. 2697322/- on a/c of unascertained provision for earned leave even though the assessee was not able to substantiate that the estimation/ calculation of these liabilities have been made on scientific basis with reasonable certainty. II. Whether on the facts and in the circumstances of the case, the ld CIT(A) was right on facts and in law in deleting the disallowance of Rs. 3559022/- made by the Assessing Officer even though the assessee did not file details of liability neither during the assessment proceedings before the AO nor during appellate proceedings before the ld CIT(A). It has neither filed any calculation nor any certificate from actuary for calculation of liabilities of gratuity and earned leave." 3. Grounds of appeal raised by assessee are as under:- "1. That the order passed by the ld CIT(A)-2, Faridabad is bad in law and on facts. 2. That the ld CIT(A) erred in confirming the disallowance of legal and professional charges of Rs. 16.60 lacs holding the same to be of capital expenditure. 3. That the ld CIT(A) has erred in confirming the disallowance of Rs. 2372070/- u/s 40(ia) of Income Tax Act, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of learned CIT (A) who has held that legal and professional expenditure incurred by the assessee were incurred in relation to construction of a building is a capital expenditure , which was not used for the purpose of the business during the year under consideration. The assessee during appellate proceedings have admitted for allowance of depreciation on the above amount therefore it is apparent that the expenditure incurred by the assessee in the form of legal and professional fees paid to an architect is for the purpose of construction of building and is capital in nature. Before the lower authorities, assessee could not show that how the architect fee paid is not a capital expenditure. In view of this ground number 2 of appeal of assessee is dismissed. 10. Ground number 3 is with respect to conformation of disallowance of Rs. 2 372070/- u/s 40 (a) (ia) of the income tax act. Facts leading to above disallowance shows that assessee has debited advertisement and interest expenditure on which tax has not been deducted at source. The learned assessing officer enquired that why disallowance should not be made for failure to deduct tax at source. It was stated by the learned aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tment in shares of various companies. Above investment has been shown as a capital investment and capitalized the interest on investment. However several other expenditure incurred in the form of establishment etc, assessee has not disallowed any sum u/s 14 A of the income tax act. As no expenses were disallowed by the assessee, learned assessing officer asked the assessee that why disallowance should not be made u/s 14 A of the income tax Act . Assessee submitted that investments were made in group companies for promotion of business or commercial expediency and therefore provisions of section 14 A do not apply. The learned assessing officer did not believe explanation and noted that 0.5% of the average investment of Rs. 7 6004625/- is worked out at Rs. 380023/- in terms of rule 8D and therefore same is thus allowed. The matter reached before the learned Commissioner of income tax (Appeals) who confirmed above disallowance. 13. We have carefully considered the contentions raised by the assessee before the lower authorities as well as the arguments of the learned departmental representative. In the present case assessee has made investment in several group companies and stated tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 16. At the time of framing the order of the appeal, 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. It is noticed that the CBDT has issued Circular No. 3 of 2018 dated 11.07.2018, vide which it has revised the monetary limit to Rs. 20,00,000/- for not filing the appeal before the Tribunal, the said circular reads as under: "Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court measures for reducing litigation-Reg. Reference is invited to Board's Circular No. 21 of 2015 dated 10.12.2015 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court were specified. 2. In supersessio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owever, 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/judgement involves more than one assessee, each assessee shall be dealt with separately. 6. Further, where income is computed under the provisions of section 115JB or section 115JC, for the purposes of determination of 'tax effect', tax on the total income assessed shall be computed as per the following formula- (A - B) + (C - D) where, A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of the disputed issues under general provisions; C = the to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 subsection (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case." 9. As the evidence of not filing appeal due to this Circular may have to be produced in courts, the judicial folders in the office of Pr. CsIT/CsIT must be maintained in a systemic manner for easy retrieval. 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra fires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ffect. Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under: "10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account. Where addition is based on information received (from external sources in the nature of law e enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligence (DGGI). (f) Cases where prosecution has been filed by the Department and is pending in the Court." 4 . The said modification shall come into effect from the date of issue of this letter. 5. The same may be brought to the knowledge of all officers wo....