PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S SURGE INDUSTRIES THROUGH ITS PARTNERS

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ITA/16/2021HC Himachal PradeshHPHC01023260202104 October 2021Author: HON'BLE MR. JUSTICE TARLOK SINGH CHAUHAN,HON'BLE MR. JUSTICE SATYEN VAIDYA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Revenue had not raised the plea of applicability of Clause 10(c) of CBDT Circular No. 3/2018 before the ITAT. Therefore, the Revenue could not be allowed to raise such a plea in the present appeal before the High Court. The ITAT had correctly held the appeal before it to be not maintainable in view of the clear mandate of Circular No. 17/2019. The Court found no substantial question of law arising for determination and dismissed the appeal. The reasoning was that the Revenue's failure to raise a specific ground before the lower appellate authority (ITAT) precluded them from raising it before the High Court. The ITAT's decision based on the monetary limits was deemed correct in the absence of any contrary submission on merits or applicability of exemptions at the ITAT stage. No issue was expressly left undecided.

What were the facts?

The assessee, M/s Surge Industries, for Assessment Year (AY) 2011-2012, declared Nil income after claiming a deduction of Rs. 1,63,78,400/- under Section 80IC of the Income Tax Act, 1961. The assessment was completed under Section 143(3) and later under Section 143(3) read with Section 147, assessing income at Rs. 1,49,595/- by disallowing Rs. 1,45,595/- of the Section 80IC deduction. The assessee's appeal to the CIT(A) was allowed. The Revenue appealed to the ITAT, Chandigarh, which dismissed the appeal. The Revenue, as appellant, is now challenging the ITAT's order before the High Court, arguing that the ITAT failed to consider the merits and relied solely on CBDT Circular No. 17/2019 regarding monetary limits for appeals.

What were the issues?

1. Whether the ITAT erred in dismissing the appeal solely on the grounds of monetary limits prescribed by CBDT Circular No. 17/2019, without considering the merits of the case? (Question of law) 2. Whether Clause 10(c) of CBDT Circular No. 3/2018, which provides an exemption from the monetary limits, was applicable in this case? (Question of mixed law and fact) Assessee's contentions: The assessee argued that the ITAT should have considered the merits of the case and that Circular No. 17/2019 was not applicable due to Clause 10(c) of Circular No. 3/2018. (Implicit from the Revenue's grounds of appeal). Revenue's contentions: The Revenue contended that the ITAT failed to consider the merits of the case and dismissed the appeal only on the basis of the monetary limit prescribed by CBDT Circular No. 17/2019. The Revenue further argued that Circular No. 17/2019 was not applicable in view of Clause 10(c) of CBDT Circular No. 3/2018.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
REPORTABLE/NON-REPORTABLE IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA ON THE 4th DAY OF OCTOBER, 2021 BEFORE HON’BLE MR. JUSTICE TARLOK SINGH CHAUHAN & HON’BLE MR. JUSTICE SATYEN VAIDYA. ITA NO. 16 of 2021 Between:- PR. COMMISSIONER OF INCOME TAX-1, AAYKAR BHAWAN, SECTOR 17-E, CHANDIGARH. …APPELLANT (BY SH. VINAY KUTHIALA, SENIOR ADVOCATE WITH MS. VANDANA KUTHIALA, ADVOCATE.) AND M/S SURGE INDUSTRIES, 777/619/428, VILLAGE OGLI, KALA AMB, DISTRICT SIRMOUR, H.P., THROUGH ITS PARTNER SH. DEEP NARAYAN GOYAL, S/O LATE SH. MADAN LAL GOYAL. ….RESPONDENT. __________________________________________________________________ This appeal coming on for admission before notice this day, Hon’ble Mr. Justice Satyen Vaidya, delivered the following:

J U D G M E N T

By way of instant appeal, the appellant seeks to assail order dated 28.05.2020, passed by the Income Tax Appellate

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Tribunal, Chandigarh (for short ‘ITAT’), in ITA No. 1223/Chd/2019. 2. Respondent herein, (for short ‘assessee’), vide its return of income for the A.Y. 2011-2012 declared Nil income, after claiming deduction of Rs. 1,63,78,400/- under Section 80IC of the Income Tax Act, 1961 (for short ‘the Act’). The case of assessee was selected for scrutiny and accordingly, vide order dated 27.12.2013 assessment under Section 143 (3) of the Act was completed. Subsequently, assessment was also framed under Section 143 (3) read with Section 147 of the Act vide order dated 30.12.2018 and income of the assessee was assessed at Rs.1,49,595/- by disallowing deduction under Section 80IC to the extent of income of Rs. 1,45,595/-.

3.

The assessee assailed the above noted assessment order before CIT(A) Shimla by way of appeal No. IT/413/18-19/Sml. The appeal of assessee was allowed vide order dated 25.06.2019. 4. The Department assailed the order of CIT(A), Shimla, before the ITAT, Chandigarh in appeal No. 1223/Chd/2019. The appeal of the Department has been dismissed by the ITAT, Chandigarh vide impugned order.

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5.

The appellant has assailed the impugned order dated 28.05.2020 passed by the ITAT, Chandigarh on the ground that the appeal was dismissed by the ITAT, Chandigarh only on the ground that the tax effect was much less than the limit prescribed by the Board in Circular No. 17/2019 dated 08.08.2019, issued by the CBDT. The appellant has further raised the grievance that the ITAT, Chandigarh had failed to consider the merits of the case. According to appellant, the above noted circular was not applicable in view of Clause 10 (c) of the CBDT Circular No. 3/2018 dated 11.07.2018. 6. We have heard learned counsel for the parties and have also gone through the records of the case.

7.

The controversy can be summed up in narrow encompass. The issue for adjudication is whether the appellant can press into service the exemption Clause 10 (c) of Circular No. 3/2018 dated 11.7.2018 issued by the CBDT.

8.

Perusal of impugned order passed by the ITAT reveals that it has taken into consideration the Circular No.17/2019 dated 8.8.2019 issued by the CBDT, which reads as under:

“Circular No. 17 of 2019

Date – 8th August, 2019

Further Enhancement of Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and 4

SLPs/appeals before Supreme Court – Amendment to Circular 3 of 2018 – Measures for reducing litigation.

Circular No. 3/2018 dated 11th July 2018 has been replaced by circular No. 17/2019 dated 8th August 2019 to enhance Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court for reducing litigation.

Appeals/SLPs in Income-tax matters Monetary Limit (Rs.) (Previous Limit) Monetary Limit (Rs.) (Revised Limit) Before Appellate Tribunal 20,00,000 50,00,000 Before High Court 50,00,000 1,00,00,000 Before Supreme Court 1,00,00,000 2,00,00,000

 The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit.

 Further, even in the case of 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, no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit.

 In case where a composite order/judgment involves more than one assessee, each assessee shall be dealt with separately.”

9.

It is not in dispute that the above noted Circular No. 17/2019 is extension of Circular No. 3/2018 issued by the CBDT whereby certain modifications have been made in the original circular especially in respect of enhancement of revision of monetary limits for appeals/SLPs in income tax matters.

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10.

It is evident from the impugned order that the Department was duly represented at the time of hearing of appeal before the ITAT, Chandigarh. No such ground had been raised on behalf of the Department before the ITAT, Chandigarh requiring the said Tribunal to decide the matter on merits in view of Clause 10 (c) of the Circular No. 3/2018. 11. Once the Department had not raised the plea of applicability of Clause 10 (c) of CBDT Circular No. 3/2018, it cannot be allowed to raise such plea in the present appeal.

12.

The ITAT has correctly held the appeal before it to be not maintainable in view of clear mandate of Circular No. 17/2019. Same principle applies to the filing of present appeal. Hence, no substantial question of law arises for determination by this Court.

13.

No other infirmity has been pointed out in the impugned order.

14.

In the light of above discussion, we find no merit in the appeal and the same is dismissed, so also the pending application(s), if any.

(Tarlok Singh Chauhan)

Judge

4th October, 2021

(Satyen Vaidya)

(GR)

Judge

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