THE ACIT, CIRCLE-2(1)(2), VADODARA vs. M/S. PRATHAM REALTY PVT.LTD., BARODA

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ITA 129/AHD/2018Status: DisposedITAT Ahmedabad13 November 2019AY 2014-153 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue's appeal was not maintainable due to the low tax effect, as per the revised monetary limits set by the CBDT circular. The appeal was dismissed on this technical ground.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the disallowance of interest expenditure. The assessee argued that the appeal should be dismissed due to low tax effect based on a new CBDT circular.

What were the issues?

Whether the Revenue's appeal is maintainable given the low tax effect in light of a new CBDT circular, and whether interest expenditure disallowance was correctly deleted by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH

Hearing: 23/10/2019Pronounced: 13/11/2019

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ “ए” अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./ Year: 2014-15 Assistant Commissioner of Vs. M/s. Pratham Realty Pvt Ltd, Income-tax, 1st Floor, Pratham, Iskon Circle 2(1)(2), Temple Road, Gotri, Baroda Vadodara [PAN : AACCP 4084 A] अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Revenue by : Shri Vidhyut Trivedi, Sr DR Assessee by : Shri Nirmit Mehta, AR सुनवाई क! तार�ख/Date of Hearing : 23/10/2019 घोषणा क� तार�ख /Date of Pronouncement: 13/11/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:

The Revenue is in appeal before the Tribunal against the order of the learned Commissioner of Income-tax (Appeals)-2, Vadodara dated 30.10.2017 passed for Assessment Year 2014-15.

2.

The grounds taken by the Revenue are as follows:-

“1.1 That in the facts and circumstances of the case, and in law, the Ld. C.I.T. (A) erred in deleting disallowance of interest expenditure u/s., 36(1)(iii) of the Act, without appreciating that the assessee had utilized interest bearing funds received from M/s. Pratham Properties for advancing interest free loan to M/s Aspire Confra Pvt. Ltd.

1.2 That in the facts and circumstances of the case, and in law, the Ld. C.I.T. (A) erred in deleting disallowance of interest expenditure u/s. 36(1)(iii) of the Act, without appreciating that there was a direct nexus between the Interest bearing funds & Interest free outflow as the assessee on the one hand had paid interest to M/s. Pratham Properties for loan/advance received, but did not charge interest on loan advanced to M/s. Aspire Confra Pvt. Ltd.”

ACIT Vs. Pratham Realty Pvt Ltd For AY: 2014-15 2

3.

When this appeal was called out for hearing, learned counsel for the assessee submitted that the appeal of the Revenue needs 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. This instruction is applicable to the pending cases also. Therefore, the present appeal of the Revenue is 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.

4.

The learned Departmental Representative fairly admitted that the tax effect involved in the appeal is less than the limit prescribed by the aforesaid CBDT Circular.

5.

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 appeal of the Revenue is 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 appeal filed by the Revenue is no longer maintainable and is dismissed as such.

6.

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

ACIT Vs. Pratham Realty Pvt Ltd For AY: 2014-15 3 Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act.

7.

In the result, appeal of the Revenue is dismissed due to low tax effect.

Order pronounced in the Court on 13th November 2019 at Ahmedabad.

Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/11/2019 Biju T., Sr.PS आदेश क! �&त'ल(प अ)े(षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं!धत आयकर आयु#त / Concerned CIT 4. आयकर आयु#त(अपील) / The CIT(A) 5. &वभागीय ��त�न!ध, आयकर अपील�य अ!धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY

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