DY. COMMISSIONER OF INCOME TAX, CIRCLE-5(1)(1), MUMBAI, MUMBAI vs. BLUE ROCK HOSPITALITY VENTURES PVT. LTD., MUMBAI

This appeal by the Revenue and the Cross Objection (CO) by the assessee arise out of the order dated 10.09.2025 passed by the Ld. CIT(A) for A.Y. 2017–18. Since common issues are involved, the same are disposed of by this consolidated order.

Briefly stated, the assessee is a company engaged in hospitality business. It filed return of income declaring loss of Rs.78,97,031/-. The case was originally assessed u/s 143(3) and subsequently revised u/s 263, pursuant to which fresh assessment was framed u/s 143(3) r.w.s. 263. In the said assessment, the Assessing Officer treated interest income as “income from other sources”, capitalized revenue expenditure of Rs.1,32,05,105/- and consequently denied carry forward of loss.

Aggrieved, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions, held that the business of the assessee had commenced and accordingly allowed the expenditure as revenue in nature, treated the interest income as business income and allowed carry forward of loss.

The Revenue is in appeal before us raising grounds challenging the action of the Ld. CIT(A) in allowing revenue expenditure, treating interest income as business income and allowing carry forward of loss.

The assessee has filed Cross Objection raising preliminary legal grounds that the departmental appeal is not maintainable on account of low tax effect as per CBDT Circular and therefore liable to be dismissed in limine.

The Ld. DR relied upon the order of the Assessing Officer.

We have heard rival submissions and perused the material available on record. The preliminary issue raised in the Cross Objection relates to the maintainability of the departmental appeal in view of the CBDT Circular governing low tax effect.

The CBDT, vide Circular No. 09/2024 dated 17.09.2024 issued u/s 268A of the Act, has enhanced the monetary limit for filing appeals before the Tribunal to Rs.60,00,000/-. The said Circular is binding on the Department and applies to pending appeals also.

In the present case, as submitted by the Ld. AR, that the tax effect involved in the departmental appeal is below the prescribed monetary limit of Rs.60,00,000/-. The Revenue has not brought any material on record to controvert the said factual position or to demonstrate that the case falls within any of the exceptions carved out in the Circular.

In view of the above and respectfully following the binding CBDT Circular, we hold that the appeal filed by the Revenue is not maintainable and is liable to be dismissed in limine.

Accordingly, the Cross Objection filed by the assessee is allowed.

Since the departmental appeal has been dismissed on account of low tax effect, the grounds raised on merits by the Revenue do not require adjudication.

In the result, the Cross Objection of the assessee is allowed and the appeal of the Revenue is dismissed with liberty as stated above.