ACIT, CIRCLE, PANIPAT, PANIPAT vs. PALIWAL OVERSEAS PVT. LTD., PANIPAT

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ITA 6266/DEL/2017Status: DisposedITAT Delhi22 February 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 noted that the tax effect of the appeal was below the prescribed monetary limit for filing appeals. The Senior Departmental Representative agreed that the appeal was not maintainable and did not press it.

What were the facts?

The Revenue filed an appeal against the deletion of additions made by the Assessing Officer. The appeal's tax effect was below the monetary limit prescribed by CBDT circulars for filing appeals.

What were the issues?

Whether the Revenue's appeal is maintainable given the low tax effect, and whether the deletion of additions by the CIT(A) was justified.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

(A) This appeal by Revenue is filed against the order of Learned Commissioner of Income Tax (Appeals)- Karnal, [“Ld. CIT(A)”, for short], dated 03.08.2017 for Assessment Year 2011-12. Grounds taken in this appeal of Revenue are as under:

“1. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals), Karnal has deleted the addition of Rs. 33,06,204/- on account of interest free advances. Since the assessee failed to prove that advances made were strictly for business purpose, hence the primary onus for establishing the nexus between borrowed funds and the purpose of business is on the assessee and the assessee could not discharge the onus of establishing the nexus.

ITA No.-6266/Del/2017 M/s. Paliwal Overseas P. Ltd.

2.

On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals), Karnal has deleted the addition of Rs. 15,52,008/- on account of expenses related to exempt income u/s 14A in accordance with Rule 8D of I.T.Rules. CBDT in exercise of its powers u/s 119 of the Act hereby clarifies that rule 8D read with section 14A of the Act provides for disallowance of expenditure even when taxpayer in a particular year has nto earned any exempt income.

3.

The appellant craves leave to add or amend the grounds of appeal before the appeal is heard or disposed off.” (B) At the outset, it was noticed by us at the time of hearing that total tax effect reported at Sl. No. 10 in Form 36 of the appeal filed by Revenue is well below Rs.50,00,000/-. This was also highlighted in letter dated 15.02.2021 filed from the assessee’s side. Vide recent CBDT Circular No. 17/2019 dated 08.08.2019 read with earlier CBDT Circular No. 3 of 2018, dated 11.07.2018, minimum threshold limit of tax effect for filing of appeals by Revenue in Income Tax Appellate Tribunal (“ITAT”, for short) has been enhanced to Rs. 50,00,000/-. In a subsequent clarification issued by CBDT vide F.No. 279/Misc/M-93/2018-ITJ, dated 20/08/2019, it has been clarified by CBDT that the aforesaid revised monetary limit is also applicable to all pending appeals in ITAT. Vide the aforesaid letter dated 15.02.2021 it was contended on behalf of the assessee that the appeal deserves to be dismissed in view of monetary limit. In view of the foregoing, Learned Senior Departmental Representative agreed that this appeal was not maintainable; and he did not press the appeal. Therefore, this appeal is dismissed being not pressed, and also being not maintainable having regard to aforesaid CBDT Circular No. 17/2019 dated 08.08.2019 read with aforesaid CBDT Circular No. 3 of 2018 in the light of aforesaid clarification dated 20/08/2019.

ITA No.-6266/Del/2017 M/s. Paliwal Overseas P. Ltd. (C) Before leaving, we clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal U/s 254(2) of Income Tax Act, 1961 seeking recall of this order and, for restoration of this appeal, if it is found that appeal of Revenue is not covered by aforesaid CBDT Circulars dated 08.08.2019 and 11.07.2018.

(D) In the result, this appeal by Revenue is dismissed.

Our order was already pronounced orally on 22.02.2021 in the presence of the Learned Sr. DR; after conclusion of hearing. Now this order in writing is released today, on 23/02/21.

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