DCIT, NEW DELHI vs. M/S. KROLL ASSOCIATES (INDIA) PVT. LTD., NEW DELHI

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ITA 1597/DEL/2016Status: DisposedITAT Delhi05 August 2021AY 2011-123 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 appeal filed by the Revenue was not maintainable due to low tax effect, which was below the monetary limit prescribed by CBDT circulars. The appeal was dismissed on this technical ground.

What were the facts?

The Revenue filed an appeal against the DRP's order concerning the assessment year 2011-12. The Revenue's grounds of appeal primarily related to the rejection of comparable companies by the DRP in transfer pricing adjustments.

What were the issues?

The primary issue was the maintainability of the Revenue's appeal before the ITAT based on the monetary limit for tax effect prescribed by CBDT circulars.

Which sections of the Income-tax Act were involved?

Section 144C(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

For Appellant: Shri Surender Pal, CIT-D.R
For Respondent: Ms. Soumya Singh &, Ms. Ananya Kapoor, Adv
Hearing: 05.08.2021Pronounced: 05.08.2021

ORDER

PER ANIL CHATURVEDI, AM:

1.

This appeal filed by the Revenue is directed against the order of the Dy. Commissioner of Income Tax - Circle-14(2), New Delhi under section 144C(5) of the Act pursuant to the direction of Dispute Resolution Panel (DRP) – I, New Delhi order dated 24.11.2015 for Assessment Year 2011-12.

2.

Revenue has raised the following grounds of appeals: 1. “That the directions of the Ld. DRP are erroneous and contrary to facts and law.

2 2. Whether in the facts and circumstances of the case and in law, the Ld. DRP was right in rejecting a comparable accepted by TPO by ignoring and misinterpretation of the facts of each comparable.

3.

Whether in the facts and circumstances of the case and in law the Ld. DRP was right in rejecting Eclerx Services Ltd. as a comparable by stating it being functionally different as compared to the assessee and ignoring the fact that it is an ITES company engaged in both BPO and KPO activities which can be a comparable as per directions of CBDT.

4. Whether in the facts and circumstances of the case and in law the Ld DRP was right in rejecting ICRA Techno Analytics Ltd as a comparable by stating it being a low turnover company as compared to the assessee and ignoring the fact that it is an ITES company which can be a comparable as per direction of CBDT.

5. That the appellant craves leave to add, alter amend or forego any ground(s) of the appeal raised above at the time of hearing.”

3. Before us, at the outset, Ld. A.R. submitted that in the impugned appeal of Revenue, the tax involved is less than the monetary limit of Rs.50 lakh and therefore, the appeal is not maintainable. Learned DR did not controvert the submissions made by Learned AR.

4.

We have heard the rival parties and perused the material on record. On perusing the grounds of appeal raised by the Revenue, we find that Revenue is aggrieved by the order of Learned CIT(A) in respect of the relief given by him. We find that CBDT vide Circular No. 3/2018 dated 11.07.2018 had increased the limit for filing appeal before ITAT at Rs. 20 lakhs. The limit for filing appeals before ITAT and other authorities were enhanced by CBDT vide Circular No.17 of 2019 dated 08.08.2019. As per the aforesaid CBDT Circular dated 08.08.2019, no Department

3 appeals are to be filed against relief given by the Learned CIT(A) before the Income Tax Appellate Tribunal unless the tax effect, excluding interest, exceeds Rs.50 lakhs. We find that in the present case, the tax effect involved is less than Rs.50 lakhs. In the absence of any material placed on record by the Revenue to demonstrate that the issue in the present appeal is covered by exceptions provided in para 10 of the aforesaid CBDT Circular of 11.07.2018, we are of the view that the monetary limit prescribed by the instructions of the CDBT Circular dated 08.08.2019 would be applicable to the present appeal of the Department. We therefore hold the present appeal of Revenue to be not maintainable on account of low tax effect. However, in case there is any error in the computation of the tax effect involved or if for any reason, the aforesaid CBDT Circular is not applicable, it would be open to the Revenue to seek revival of the appeal. Thus the appeal of the Revenue is dismissed.

5.

In the result, the appeal of Revenue is dismissed.

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