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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the Revenue challenging the impugned order dated 18/09/2020, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–44, Mumbai, [“learned CIT(A)”], for the assessment year 2010–11.
During the course of hearing, at the outset, the learned Authorised Representative (“learned A.R.”) submitted that the tax effect involved in M/s. MCR Construction ITA No.108/Mum./2021 the present appeal by the Revenue is below Rs.50 lakh as provided in CBDT Circular no.17/2019, dated 08/08/2019. The learned A.R. submitted that the amount of tax as mentioned in Form no.36, filed by the Revenue is wrongly calculated at Rs.50,98,500. As per the learned A.R., the said tax effect was calculated after considering surcharge @ 10%, which is not leviable in the case of a firm. The learned A.R. submitted that the total tax effect in the present case is only Rs.46,35,000, and prayed that the present appeal be dismissed in view of the CBDT Circulars.
On the other hand, the learned Departmental Representative did not dispute that the assessee is a partnership firm, as the said position has also not been disputed by any of the lower authorities.
We have considered the rival submissions and perused the material available on record. In the present case, it is not in dispute that the assessee is a partnership firm and engaged in the business of civil contract and carrying business for/on behalf of various Government, Semi Government agencies. The Revenue being aggrieved by the impugned order passed by the learned CIT(A) filed the present appeal. In Form no.36, the tax effect relating to the ground of appeal is mentioned at Rs.50,98,500. As per the assessee, this tax effect includes the surcharge computed @ 10%. The computation submitted by the learned A.R. is as under:–
Rs.45,00,000 Tax @ 30% Page | 2
M/s. MCR Construction ITA No.108/Mum./2021
Rs.4,50,000/– SC @ 10% Rs.49,50,000/– Total Tax & Surcharge Rs.99,000/– Edu. Cess @ 2% Rs.49,500/– S&H Edu. Cess @ 1% Rs.50,98,500 Total Tax Effect as per Form 36
We find that the CBDT, vide Circular no.1/2011 – Explanatory Notes to the provisions of Finance Act, 2010, provided as under:–
“3.1–4 FIRMS – In the case of every firm, the rate of income–tax of thirty per cent has been specified in Paragraph C of Part I of the First Schedule to the Act. No surcharge shall now be levied in the case of a firm.”
In view of the above, the correct tax effect in the present appeal, as submitted by the learned A.R. is as under:–
TAX EFFECT DISPUTED ADDITION Tax @ 30% – Rs.45,00,000/– Edu Cess @2%– Rs. 90,000/– Rs.1,50,000,00/– S&H Edu. Cess @ 1% – 45,000/– Total Tax Effect Rs.46,35,000/–
As the assessee is accepted to be a firm, therefore, in view of the CBDT Circular no.1/2011, no surcharge is leviable in case of the assessee and, hence, in our view, the correct tax effect in the present appeal is Rs.46,35,000, which is below the revised monetary limit of Rs. 50 lakh as per CBDT Circular no.17/2019, dated 08/08/2019, r/w CBDT Circular no.3/2018, dated 11/07/2018, r/w circular F. no.279/Misc./142/2007-IT)- (Pt) dated 20/08/2018. In view of the aforesaid, Revenue's appeal deserves to be dismissed. However, the Revenue is given liberty to seek recall of this order if, at a later point of time, it is found that the appeal Page | 3
M/s. MCR Construction ITA No.108/Mum./2021 falls under any of the exceptions provided in the Circulars referred to above.