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Facts
The Revenue filed an appeal against the order of the CIT(A) for assessment year 2006-07. The appeal was delayed by 22 days, which was condoned. The Revenue's primary ground concerned the deletion of disallowance under Section 14A.
Held
The Tribunal condoned the delay in filing the appeal. Subsequently, the Tribunal considered the tax effect of the appeal, which was found to be below the threshold limit prescribed by the CBDT.
Key Issues
Whether the tax effect in the appeal is below the prescribed monetary limit by the CBDT, thus warranting dismissal as withdrawn.
Sections Cited
115JB, 14A, 10, 11, 12, 143(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the Revenue is directed against order dated 30.03.2024 passed by the National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2006-07. The relevant grounds raised by the Revenue are reproduced as under:
"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing assessee the actual expenses
related to investments yielding exempt income w/s. 115JB r.w.s. related to investments yielding exempt income w/s. 115JB r.w.s. related to investments yielding exempt income w/s. 115JB r.w.s. 14A, ignoring the provision of explanation 1 () of Section 1 1 5JB of 14A, ignoring the provision of explanation 1 () of Section 1 1 5JB of 14A, ignoring the provision of explanation 1 () of Section 1 1 5JB of the Act?" 2. "Whether on the facts and circumstances of the case and in law, 2. "Whether on the facts and circumstances of the case and in law, 2. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Ld. CIT(A) failed to appreciate that perusal of Section 115JB of perusal of Section 115JB of the Act reveals that the tinkering with P & L a/c. as prepared in the Act reveals that the tinkering with P & L a/c. as prepared in the Act reveals that the tinkering with P & L a/c. as prepared in accordance with the provision of the Company's Act is permissible to accordance with the provision of the Company's Act is permissible to accordance with the provision of the Company's Act is permissible to the extent provided in explanation 1 to Section 115JB (2) of the Act the extent provided in explanation 1 to Section 115JB (2) of the Act the extent provided in explanation 1 to Section 115JB (2) of the Act and clause (f) to explan and clause (f) to explanation 1 to Section 115JB (2) of the Act permits ation 1 to Section 115JB (2) of the Act permits the book profit to be increased with the expenditure relatable to any the book profit to be increased with the expenditure relatable to any the book profit to be increased with the expenditure relatable to any income to which Section 10 (other than Section 10(38) of the Act. income to which Section 10 (other than Section 10(38) of the Act. income to which Section 10 (other than Section 10(38) of the Act. Section 11 or 12 of the Act applies?* Section 11 or 12 of the Act applies?* 3. "Whether on the facts and in th "Whether on the facts and in the circumstances of the case and in e circumstances of the case and in law the Ld. CIT(A) erred in deleting the disallowance u/s.14A without law the Ld. CIT(A) erred in deleting the disallowance u/s.14A without law the Ld. CIT(A) erred in deleting the disallowance u/s.14A without appreciating the fact that provisions of Section appreciating the fact that provisions of Section 14A(1) was inserted in 14A(1) was inserted in the Finance Act 2001 w.e.f. 01.04.1962 and ignoring the provision of the Finance Act 2001 w.e.f. 01.04.1962 and ignoring the provision of the Finance Act 2001 w.e.f. 01.04.1962 and ignoring the provision of clause (f) to explanation (1) to Section 115JB(2).* to explanation (1) to Section 115JB(2).* 4. "Whether on the facts and circumstances of the case and law, the "Whether on the facts and circumstances of the case and law, the "Whether on the facts and circumstances of the case and law, the Ld. CIT(A) erred in deleting the disallowance u/s.14A amounting of Ld. CIT(A) erred in deleting the disallowance u/s.14A amounting of Ld. CIT(A) erred in deleting the disallowance u/s.14A amounting of Rs.88, 19,62,087/ Rs.88, 19,62,087/ - without appreciating the fact that the assessee without appreciating the fact that the assessee suo moto admitted and requested to restrict the disallowance under mitted and requested to restrict the disallowance under mitted and requested to restrict the disallowance under clause (f) of explanation (1) to Section 115JB(2)p" clause (f) of explanation (1) to Section 115JB(2)p" 5. "Whether on the facts and circumstances of the case and law, the "Whether on the facts and circumstances of the case and law, the "Whether on the facts and circumstances of the case and law, the Ld.CIT(A) erred in deleting the disallowance u/s.14A without Ld.CIT(A) erred in deleting the disallowance u/s.14A without Ld.CIT(A) erred in deleting the disallowance u/s.14A without appreciating the fa appreciating the fact that the object of deeming provision is to ct that the object of deeming provision is to substitute the total income computed under normal provision by that substitute the total income computed under normal provision by that substitute the total income computed under normal provision by that computed under MAT provisions computed under MAT provisions u/s. 115JB» 2. The Ld. Departmental Representative (DR) submitted that The Ld. Departmental Representative (DR) submitted that The Ld. Departmental Representative (DR) submitted that there was a delay of 22 days in filing th there was a delay of 22 days in filing this appeal. He submitted a is appeal. He submitted a copy of the letter filed by the AO wherein he has mentioned that copy of the letter filed by the AO wherein he has mentioned that copy of the letter filed by the AO wherein he has mentioned that due to excess work load of filing writ petitions, scrutiny reports and due to excess work load of filing writ petitions, scrutiny reports and due to excess work load of filing writ petitions, scrutiny reports and other time barring matters, delay occurred in filing present appeal, other time barring matters, delay occurred in filing present appeal, other time barring matters, delay occurred in filing present appeal, which was due to bona fid which was due to bona fide reasons. In view of reasons explained, e reasons. In view of reasons explained, the delay in filing appeal is condoned and appeal is admitted for the delay in filing appeal is condoned and appeal is admitted for the delay in filing appeal is condoned and appeal is admitted for adjudication.
3. At the outset, the Ld. Authorized Representative submitted At the outset, the Ld. Authorized Representative submitted At the outset, the Ld. Authorized Representative submitted that tax effect involved in the present appeal is below the threshold that tax effect involved in the present appeal is below the threshold that tax effect involved in the present appeal is below the threshold limit of Rs.60 lakhs prescribed by the Central Board of Direct Taxes it of Rs.60 lakhs prescribed by the Central Board of Direct Taxes it of Rs.60 lakhs prescribed by the Central Board of Direct Taxes (CBDT) for preferring appeal before the Tribunal vide its Circular (CBDT) for preferring appeal before the Tribunal vide its Circular (CBDT) for preferring appeal before the Tribunal vide its Circular No. 09/2024 dated 17 No. 09/2024 dated 17th September, 2024. The relevant calculation September, 2024. The relevant calculation of the tax effect has been filed by the Ld. Authorized Representative of the tax effect has been filed by the Ld. Authorized Rep of the tax effect has been filed by the Ld. Authorized Rep is as under:
In the matter of ACIT 2(2H1) vs Panatone Finvest Limited- In the matter of ACIT 2(2H1) vs Panatone Finvest Limited Calculation of tax effect- Paras 5.1 and 5.2 of the Circular 5 of 2024 dated 15 March 2024 Paras 5.1 and 5.2 of the Circular 5 of 2024 dated 15 March 2024 Paras 5.1 and 5.2 of the Circular 5 of 2024 dated 15 March 2024 Para 5.1- Tax effect = (X) Tax on total income assessed ( Tax effect = (X) Tax on total income assessed (-) (Y) Tax that would have been (Y) Tax that would have been chargeable had such income been reduced by the amount of income in respect of issues chargeable had such income been reduced by the amount of income in respect of issues chargeable had such income been reduced by the amount of income in respect of issues against which appeal is filed against which appeal is filed Determination of X- Para 5.2 Para 5.2- tax on assessed income for 115JB cases X= (A tax on assessed income for 115JB cases X= (A-B) + (C-D) Particulars Amount in INR Remarks Remarks Where A= total income assessed as per (2,85,38,570) Where A= total income assessed as per As per order u/s 143(3) rws 254 As per order u/s 143(3) rws 254 general provisions dated 31 December 201 8 dated 31 December 201 8 Where B= total income that would have Where B= total income that would have (2,85,38,570) been chargeable had the total income been chargeable had the total income assessed as per general provision been assessed as per general provision reduced by the amount of the disputed reduced by the amount of the disputed issues under general provision issues under general provision Where C= Total income assessed as per C= Total income assessed as per 98,69,516 Section 115JB Where D= Total income that would have Where D= Total income that would have Nil (98,69,516- As the total income chargeable As the total income chargeable been chargeable had the total income been chargeable had the total income 98,69,516) under section 115JB cannot be under section 115JB cannot be assessed as per 115JB was reduced by was reduced by a negative figure. a negative figure. the amount of disputed issues under the amount of disputed issues under 115JB X= (A-B) + (C-D) 98,69,516 Tax on X @7.5% + Applicable Cess Tax on X @7.5% + Applicable Cess 7,55,018 As per order u/s 143(3) rws 254 As per order dated 31 December 2018 dated 31 December 201 Determination of Y Nil (98,69,516- As the total income chargeable As the total income chargeable 98,69,516) under section 115JB cannot be under section 115JB cannot be a negative figure. Furthermore, a negative figure. Furthermore, 'tax that would have been 'tax that would have been chargeable' can also not be a chargeable' can also not be a negative figure. negative figure.
Under the permissible monetary Under the permissible monetary threshold limit of INR threshold limit of INR 50,00,000 as per Circular 5 of 50,00,000 as per Circular 5 of 2024 dated 15 March 2024 2024 dated 15 March 2024 Tax effect = X-Y 7,55,018 issued by CBDT issued by CBDT 3.1 The Ld. DR could not controvert the computation of the tax The Ld. DR could not controvert the computation of the tax The Ld. DR could not controvert the computation of the tax effect which is admittedly below the threshold limit prescribed by is admittedly below the threshold limit prescribed by is admittedly below the threshold limit prescribed by the CBDT (supra). A . Accordingly, the appeal of the Revenue is ccordingly, the appeal of the Revenue is dismissed as withdrawn with liberty to file Miscellaneous dismissed as withdrawn with liberty to file Miscellaneous dismissed as withdrawn with liberty to file Miscellaneous Application for recalling the appeal in case, t r recalling the appeal in case, the tax effect in the he tax effect in the appeal is found to be more than the prescribed limit or the appeal is to be more than the prescribed limit or the appeal is to be more than the prescribed limit or the appeal is falling in any of the exceptions to the said Circular any of the exceptions to the said Circular of CBDT of CBDT.
In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed.