THE COMMISSIONER OF INCOME-TAX vs. SMT. SABITA SHARMA

ITA/595/2007HC KarnatakaKAHC01051521200718 December 2013Bench: N.KUMAR,RATHNAKALA4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court relied on its own previous judgment in Commissioner of Income Tax & Another –vs- Ranka and Ranka, which held that CBDT Instruction No.3 of 2011, despite stating it applies to appeals filed on or after February 9, 2011, should be extended to appeals pending as of that date, making the instruction retrospective. Consequently, the High Court found that the present appeals, where the net tax effect was less than Rs. 10 lakhs, were not maintainable in light of this precedent. The Court acknowledged that the Revenue had appealed the Ranka and Ranka judgment to the Apex Court and reserved liberty for the Revenue to seek revival of these appeals if the Apex Court reversed the High Court's decision. No decision was made on the merits of the substantive tax dispute.

What were the facts?

The Revenue, comprising the Commissioner of Income-tax, the Income Tax Officer, and the Assistant Commissioner of Income-Tax, filed two appeals (ITA Nos. 594/2007 and 595/2007) before the High Court of Karnataka. These appeals challenged orders passed by the Income Tax Appellate Tribunal, Bangalore. The net tax effect in these appeals was stated to be above Rs. 4 lakhs and less than Rs. 10 lakhs. The respondent in both appeals is Smt. Sabita Sharma. The appeals were filed under Section 260A of the Income Tax Act, 1961, seeking to set aside the Tribunal's orders and confirm the orders of the Appellate Commissioner and the Assistant Commissioner of Income Tax, Mumbai.

What were the issues?

1. Whether the High Court's judgment in Commissioner of Income Tax & Another –vs- Ranka and Ranka (2012) DTR (Kar) 270, which held CBDT Instruction No.3 of 2011 to be retrospective, applies to appeals filed before February 9, 2011, thereby rendering appeals with a tax effect below Rs. 10 lakhs not maintainable. The Revenue argued that the appeal was maintainable, but the High Court's prior judgment in Ranka and Ranka was binding. The judgment does not record specific arguments from the Revenue regarding the merits of the case, focusing instead on the maintainability of the appeal based on the tax effect and the CBDT instruction. The Respondent's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 18th DAY OF DECEMBER 2013

PRESENT

THE HON’BLE MR. JUSTICE N.KUMAR AND THE HON’BLE MRS. JUSTICE RATHNAKALA

I.T.A. NO.594/2007 A/W. I.T.A. NO.595/2007

BETWEEN :

The Commissioner of Income-tax,

Central Circle, C.R.Building, Queens Road, Bangalore.

The Income Tax Officer, Ward 7(2), Bangalore.

The Assistant Commissioner Of Income-Tax, Circle 11(1), Income Tax Building, Mumbai. ...APPELLANTS (Common in both)

(By Sri.K.V.Aravind, Adv.)

AND :

Smt.Sabita Sharma, 662, 1st Main Road, Defence Colony, Indiranagar, Bangalore. …RESPONDENT (Common in both)

(By Sri.S.Parthasarathi, Adv.) . . . .

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I.T.A. No.594/2007 is filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeal and set-aside the order passed by the Income Tax Appellate Tribunal, Bangalore in I.T.A. No.380/Bang/2004 dated 30.03.2007 and confirm the order of the Appellate Commissioner confirming the order passed by the Asst. Commissioner of Income Tax, Circle-11(1) , Mumbai in the interest of justice and equity.

I.T.A. No.595/2007 is filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeal and set-aside the order passed by the Income Tax Appellate Tribunal, Bangalore in I.T.A. No.1199/Bang/2002 dated 30.03.2007 and confirm the order of the Appellate Commissioner confirming the order passed by the Asst. Commissioner of Income Tax, Circle-11(1) , Mumbai in the interest of justice and equity.

These I.T.As. coming on for hearing, this day, N.Kumar J., delivered the following:

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JUDGMENT

This appeal is preferred by the Revenue, challenging the order passed by the Tribunal.

The net tax effect, which is the subject matter of this appeal, is above Rs.4 lakhs and less than Rs.10 lakhs.

In view of the judgment of this Court in the case of Commissioner of Income Tax & Another –vs- Ranka and Ranka reported in 2012(72) DTR (Kar) 270, wherein it was held that notwithstanding Clause 11 of CBDT Instruction No.3 of 2011 dated 9th February 2011, expressly providing that the instructions will apply to appeals filed on or after 9th February 2011 and appeals filed earlier will be governed by contemporaneous instructions, the application of said instructions needs to be extended to appeals pending as on 9th February 2011. In other words, the said instruction was held to be retrospective. In view of the said instructions, this appeal preferred by the Revenue where the tax effect is less than Rs.10 lakhs, is not

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maintainable. However, it is submitted that the Revenue has preferred an appeal against the order of this Court before the Apex Court. Hence, in the event of the Apex Court reversing the said judgment, liberty is reserved to the Revenue to seek for revival of this appeal.

The appeal is dismissed.

Sd/- JUDGE

SPS

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