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Facts
The Revenue appealed against the Ld. CIT(A)'s order for Assessment Year 2014-15. The CIT(A) allowed the assessee's claims by treating Rs. 53,53,183/- as 'income from house property', allowing a business loss of Rs. 1,27,45,873/-, and permitting set-off of unabsorbed depreciation of Rs. 12,19,967/-. The Revenue had calculated the tax effect as Rs. 62,68,057/-.
Held
The Tribunal accepted the Ld. AR's contention that the actual tax effect of the CIT(A)'s order was Rs. 50,52,498/-, which is below the prescribed monetary limit of Rs. 60 lakhs for filing appeals before the Hon'ble ITAT, as per CBDT Circulars. Therefore, the Revenue's appeal was dismissed as not maintainable.
Key Issues
Whether the Revenue's appeal was maintainable before the ITAT when the actual tax effect of the disputed issues fell below the monetary limit stipulated by CBDT Circulars for filing appeals.
Sections Cited
147, 144, 144B, 24(a)
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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI BRAJESH KUMAR SINGH
आदेश /O R D E R PER BRAJESH KUMAR SINGH, AM,
This appeal is filed by the Revenue against the order of National Faceless Appeal Centre/Ld. CIT(A), Delhi, dated 20.01.2025 for the Assessment Year 2014-15, arising out of order u/s 147 r.w.s 144 r.w.s.144B of the Income Tax Act,1961 (hereinafter referred as ‘the Act’) dated 30.03.2022.
The Revenue has raised the following grounds of appeal:-
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 53,53,183/- on account of business income for the year under consideration.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee by allowing the business loss amounting to Rs. 1,27,45,873/- on account of business loss for the year under consideration.
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee by allowing the current year depreciation amounting to Rs. 12,19,967/- on account of current year depreciation for the year under consideration. 3. The Department has calculated the tax effect on the above items at Rs.62,68,057/- by considering the total disallowance/addition disputed in appeal in the above grounds of appeal amounting to Rs.1,93,19,023/- (Rs.53,53,183/- + Rs.1,27,45,873/- + Rs.12,19,967/-).
4. At the outset, the Ld. AR submitted that the above tax calculation was not correct because the AO had treated a sum of Rs.53,53,183/- out of total rental income of Rs.1,96,14,082/- as business income being ‘rent on plant & machinery’ and considered the balance amount of Rs.1,42,60,899/- as ‘income from house property’. Further, it was submitted that the AO had disallowed the claim of business loss of Rs.1,27,45,873/- and further did not allow set off of unabsorbed depreciation amounting to Rs.12,19,967/- (Rs.9,83,284/- + Rs.2,36,683/-) out of total unabsorbed depreciation amounting to Rs.77,14,521/- against the balance ‘income from House Property’ and ‘Income from other Sources’. The Ld. AR further submitted that the ld. CIT(A) restored the stand of the assessee in claiming the amount of Rs.53,53,183/- as ‘income from house property’ and further allowed the business loss of Rs.1,27,45,873/- and also allowed the set off of aforesaid unabsorbed depreciation amounting to Rs.12,19,967/- against the balance income and ‘income from other sources’ amounting to Rs.2,36,683/-. The ld. AR further submitted that in respect of allowing the claim of the assessee for treating the sum of Rs.53,53,183/- as ‘income from house property’ as against business income held by the AO, the assessee gained standard deduction of Rs.16,05,954/- (30% of Rs.53,53,183/- u/s 24(a) of the Act).
Therefore, it was submitted that the Department should have calculated the tax effect on Rs.1,55,71,794/- (i.e. Rs.16,05,954/- + Rs.1,27,45,873/- + Rs.12,19,967/-) instead of Rs.1,93,19,023/-, which comes to Rs.50,52,498/- which was less than the tax limit for filing appeal before the Tribunal and therefore this appeal of the Revenue should be dismissed on low tax effect. In this regard, the ld. AR filed a written submission, the relevant extract of which is reproduced as under:-
“In connection with above appeal filed by the Revenue, it is submitted that the tax effect in the appeal is only Rs 50.52 lakhs and thus deserves to be dismissed solely on grounds of low tax effect. Detailed submissions in this regard is as under:-
1. 1. That assessment order u/s 147 was passed in this case by ITO NFAC on 30.03.2022. Total income of assessee was assessed at Rs. 1,55,72,496/- and tax of Rs. 50,52,498/- was deemed to be payable as against Rs Nil tax payable by assessee. Copy of ITR and computation of income is at Page 4-6 while assessment order is at Page 7-14 and computation sheet of the order is at Page 15-18.
2. In brief: a. AO had disallowed entirety of business expense of Rs.1,27,45,873/- and depreciation of Rs.12,19,967/- b. AO taxed rental income of Rs 53,53,183/- as business income as against 70% of it being offered for tax by assessee under house property head.
That assessee had appealed before Id CIT(A) and Id CIT(A) has decided the appeal vide order dt.20.1.2025 and allowed following relief (copy of CITA order at Page 19-43): a. Allowed business expenses of Rs.1,27,45,873/- (Para 11.5 on page 23 of CITA order) b. Allowed current year depreciation of Rs.12, 19,967/- (Para 12.2 on page 24 of CITA order) c. Held rental income of Rs.53,53,183/- to be taxed as House property income as against business income and allowed standard deduction of 30% (Para 10.1 on page 22 of CITA order) 4. That a comparative summary of ITR, Assessment order and CIT(A) order is as under:-
5. As can be seen from above table, CIT(A) has only provided relief to the extent of Rs.1,55,71,495/-and tax effect on the same was Rs.50,52,498/- as can be seen from computation sheet of assessment order at Page 15-18.
6. However, Id AO in form 36 incorrectly mentioned total disputed income. at Rs. 1,93,19,623/- at Sno 7(c) and specified Rs. 62,68,057/- as tax effect at Sno. 10 of form 36.
However, actual tax effect of CIT(A) order is only Rs 50,52,498/- which was also payable as per AO's order. Kind attention is invited that as per CBDT Circular 9/2024 dated 17.09.2024 r.w. Circular no. 5/2024 dated 15.3.2024, appeals having tax effect below Rs 60 lakhs are not maintainable before the Honble ITAT.
Resultantly, it is submitted that the appeal filed by the revenue deserves to be dismissed as it is non maintainable due to low tax effect.
We have considered the rival submissions and perused the material available on record. On perusal of the above facts, we find that the contention of the ld. AR regarding the tax calculation is correct and the tax effect in the case is below the prescribed monetary limit for filing of appeal before the Tribunal. We, therefore, dismiss the appeal of the Revenue as not maintainable.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 31st July, 2025.