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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Per Pramod Kumar, Vice President :
The present two appeals, filed by the Assessing Officer, are directed against the separate orders dated 18th / 17th November 2016 passed by the CIT(A)-2, Vadodara, in the respective cases, in the matter of assessment under section 143(3) r.w.s. 92CA r.ws. 144C(4) of the Income Tax Act, 1961, for the assessment year 2011-12.
IT(TP)A Nos. 348 & 349/Ahd/2017 ACIT Vs. Talent Anywhere Services Pvt Ltd Assessment year: 2011-12 Page 2 of 4 2. The grievances raised by the Assessing Officer, which are common in both the appeals, are as follows:-
“1. On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in directing the A.O. to consider Quintegra Solution Ltd., without appreciating that unlike M/s. Quintegra Solution Ltd., no merger and acquisition event had taken place in the case of M/s. CTIL Ltd. and M/s Spy Resource India Ltd.
On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in directing the A.O. to consider Quintegra Solution Ltd as comparable for determination of ALP without appreciating that economic circumstances of M/s. Quintegara Solutions Ltd were not comparable with that of the assessee company, since it was mentioned in the Annual Report of M/s. Quintegra Solution Ltd. for A.Y. 2011-12 that margin were adversely impacted in view of acquisitions carried out in earlier financial year.
3. On the facts and circumstances of the case, the Ld. C.I.T.(A) erred in directing the AO/TPO to exclude the forex loss/gain from the operating revenue of both comparables and tested party, without distinguishing as to how the same were identical to both comparables and tested party, and without appreciating that the test for excluding the forex loss gain from operating revenue varies from case to case.
On the facts and circumstances of the case, the Ld. C.I.T. (A) erred in directing the AO/TPO to exclude the Misc. income from the operating revenue of both comparables and tested party without examining the nature of such income.”
When these appeals were called out for hearing, learned counsel for the assessee submitted that these appeals of the Revenue need to be dismissed on account of low tax effect in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019 whereby the monetary limits for filing the appeal by the Revenue before the Tribunal was enhanced from Rs.20 lakhs to Rs.50 lakhs. Learned Counsel for the assessee also submits that in the case of Quickstart Resource Management Pvt Ltd, the tax effect is Rs.46,71,280/-, while in the case of QSG Resource Management Pvt Ltd, the tax effect is Rs.44,22,457/- and he has also placed on record the working for the same. The learned counsel for the assessee also submits that the aforesaid CBDT instruction is applicable to the pending cases as well. Therefore, the present appeals of the Revenue are liable to be dismissed as non-maintainable as held by this Tribunal in the case of ITO Vs. Dinesh Madhavlal Patel in for AY 1998-99 vide a consolidated order dated 14.08.2019.
IT(TP)A Nos. 348 & 349/Ahd/2017 ACIT Vs. Talent Anywhere Services Pvt Ltd Assessment year: 2011-12 Page 3 of 4 4. The learned Departmental Representative fairly admitted that the tax effect involved in each appeal is less than the limit prescribed by the aforesaid CBDT Circular.
We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. As learned counsel rightly contends, the present appeals of the Revenue are no longer maintainable in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019. The mandatory limit for cases in which Revenue can challenge the relief granted by the CIT(A) now stands enhanced to Rs.50 lakhs. This concession granted by the Central Board of Direct Taxes (CBDT) is retrospective in effect inasmuch as it applies to all pending appeals as well. In view of the above position, the appeals filed by the Revenue are no longer maintainable and must be dismissed as such.
It is, however, made clear that on re-verification at the end of the Assessing Officer it comes out that the tax effect of more than Rs.50 lakhs is being involved in the appeal or the appeal falls within the exemption clause of the Circular, then the Revenue will be at liberty to file Miscellaneous Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act.