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आदेश/Order
Per Sanjay Garg, Judicial Member:
The captioned appeal by the Revenue and corresponding Cross Objections by the assessee are arising from the order dated 21.02.2018
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana. 2 of the Commissioner of Income Tax (Appeals)-II, Ludhiana [hereinafter
referred to as CIT(A)]
First, we take up Revenue’s appeal in ITA No. 336/Chd/2008.
ITA No. 336/Chd/2008:
None appeared on behalf of the assessee. It is noticed that this
appeal filed by the Department is not maintainable in view of the recent
Circular No. 17/2019 dt. 08/08/2019 issued by CBDT, wherein, the
monetary limit for filing the appeals by the Department before the ITAT
has been increased to Rs. 50,00,000/- from Rs. 20,00,000/-.
However, the Ld. CIT DR submitted that the Circular No. 17/2019
dt. 08/08/2019 is not clearly retrospective in as much as it specifically
states in para 4 that “ the said modification shall come into effect from
the date of issue of this Circular” It was stated that the aforesaid
sentence clearly gives an impression that the said Circular is applicable
after the date mentioned there in and thereafter the departmental appeals
which come in the specified tax effect limit will not be filed. The Ld.
Counsels appearing on behalf of the assessees vehemently opposed the
contention of the Ld. CIT(DR) and they were unanimous in their
arguments that the Circular must be held to have retrospective
application and must equally apply to the pending appeals as well, since
the present Circular only modifies the monetary limit earlier mentioned
in Circular No. 3 of 2018 dt. 11/07/2018.
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana.
3 5. We have considered the submissions of Ld. CIT DR and carefully
gone through the material available on the record. In the present case it
is an admitted fact that the CBDT vide Circular No. 17/2019 enhanced
the monetary limit to Rs. 50,00,000/- for not filing the appeal by the
department before the ITAT, earlier this limit was specified at Rs.
20,00,000/- in the original Circular no. 03/2018 dt. 11/07/2018. Now
vide the new Circular no. 17/2019 dt. 08/08/2019 the Tax Effect limit
has been enhanced and this new Circular dt. 08/08/2019 read as under;
Circular No. - 17 of 2019 Date - 8th August 2019
Further Enhancement of Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court -Amendment to Circular 3 of 2018 - Measures for reducing litigation.
Circular No. 3/2018 dated 11th July 2018 has been replaced by Circular No. 17/2019 dated 8th August 2019 to enhance Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court for reducing litigation.
Appeals/SLPs in Income-tax Monetary Limit (Rs.) Monetary Limit (Rs.) matters [Previous Limit) (Revised Limit)
Before Appellate Tribunal 20,00,000 50,00,000 Before High Court 50,00,000 1,00.00.000 Before Supreme Court 1,00,00,000 2.00.00,000
• The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit • Further, even in the case of composite order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year, no appeal shall be filed in
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana.
4 respect of an assessment year or years in which the tax effect is less than the monetary limit • In case where a composite order/ judgement involves more than one assessee. each assessee shall be dealt with separately.
From the contents of the aforesaid Circular it is crystal clear that
the anomaly in the earlier Circular no. 3 of 2018 dt. 11/07/2018 at page
5 has been removed and the limit specified in para 3 of the earlier
Circular has been enhanced. It is also not in dispute that the earlier
Circular was applicable retrospectively to the pending appeals / cross
objections and para nos. 12 & 13 of the original Circular no. 03/2018 dt.
11/07/2018 read as under:
It is clarified that the monetary limit of Rs. 20 lakhs for filing appeals before the IT AT would apply equally to cross objections under section 253(4) of the Act. Cross objections below this monetary limit, already filed, should be pursued for dismissal as withdrawn/ not pressed. Filing of cross objections below the monetary limit may not be considered henceforth. Similarly, references to High Courts and SLPs/ appeals before Supreme Court below the monetary limit of Rs. 50 lakhs and Rs. 1 Crore respectively should be pursued for dismissal as withdrawn/ not pressed. References before High Court and SLPs/ appeals below these limits may not be considered henceforth. 13. This Circular will apply to SLPs/ appeals/ cross objections/ references to be filed henceforth in SCIHCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed.
Now the CBDT simply enhanced the monitory limit and the
directions given earlier vide para nos. 12 & 13 of the Circular no. 3 /
2018 dt. 11/07/2018 are still intact which is crystal clear from the
language of the Circular no. 17/2019, wherein, it has been mentioned
that there is enhancement of monetary limit and amendment to Circular
no. 3 /2018 for reducing the litigation. We, therefore, are of the
confirmed view that the amended Circular No. 17/2019 now issued by
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana.
5 the CBDT is also applicable to the pending appeals as has been specified
in para 13 of the original Circular no. 3/2018 dt. 11/07/2018 and that the
Department ought not to have filed the present appeal before the ITAT
where the tax effect is Rs. 50 Lacs or less. For the aforesaid view, we
are also fortified by the decision dt. 14/08/2019 of the Coordinate Bench
i.e ITAT, Ahmedabad Bench ‘A’ Ahemdabad in ITA No. 1398/Ahd/2004
for the A.Y. 1998-99 in the case of ITO, Ward-3(2) Ahmedabad Vs.
Dinesh Madhavlal Patel, Ahmedabad & others wherein it has been held
in para 5 to 7 as under:
Having considered the rival submissions and having perused the material on record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending for disposal as on now. Our line of reasoning is this. The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular no 3 of 2018 (and subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. This is evident from the following extracts from the circular dated 8th August 2019: 2. As a step towards further management of litigation, it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows:
S.No. Appeals/SLPs in Income-tax matters Monetary Limit (Rs.) 1 Before Appellate Tribunal 50,00,000 2 Before High Court 1,00,00,000 3 Before Supreme Court 2,00,00,000
Further, with a view to provide parity in filing of appeals in scenarios where separate order is passed by higher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessment years is passed, para 5 of the circular is substituted by the following para: "5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If in the case of an assessee, the
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana.
6 disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. Further, even in the case of composite order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In case where a composite order/ judgement involves more than one assessee, each assessee shall be dealt with separately" 4. The said modifications shall come into effect from the date of issue of this Circular.
Clearly, all other portions of the circular no. 3 of 2018 (supra) have remained intact. The portion which has remained intact includes paragraph 13 of the aforesaid circular which is as follows: 13. This Circular will apply to SLPs/ appeals/ cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed. 7. In view of the above discussions, we hereby hold that the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth.
In view of the aforesaid discussion, the present appeal filed
by the Department is dismissed due to low tax effect. It is,
however, clarified that the dismissal of the above appeal shall not be
taken to be affirmation of the order of the CIT(A) on merits. The legal
issue raised by the Revenue is being left open to be adjudicated in an
appropriate case.
C.O. No. 15/Chd/2008 – by Assessee :
The assessee has taken following Cross objections:-
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana. 7 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in restricting the addition to 5% of the total expenses of Rs. 1,19,34,080/- against the addition of 10% as made by the Assessing Officer as per page 30 of the order of the CIT (Appeal) . 2. That the Ld. Commissioner of Income tax (Appeals) has erred in confirming the action of the Assessing Officer in not allowing deduction u/s 80 IB on DEPB and Duty draw back being export incentives as per page 30 of the order of CIT (Appeal). 3. That the respondent craves leave to add or amend any ground of cross-objections before the appeal is finally heard or disposed off.
Ground No.1: Vide ground No.1, the assessee has agitated the
action of the CIT(A) in confirming the disallowance of expenditure to
the extent of 5% of the total expenses claimed under different heads.
The Assessing Officer disallowed 10% of the total expenses claimed by
the assessee under different heads observing that the majority of the
payments were made in cash and that some of the expenses claimed
under the different heads were not verifiable at all.
The Assessing Officer also observed that the percentage of
manufacturing expenses had increased from 8.45% in the preceding year
to 16.57% as given in the table in the assessment order. The Ld. CIT(A)
however, restricted the disallowance to 5% of the expenses considering
the overall facts and circumstances of the case and observing that
though the assessee might have some ground in respect of payments
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana. 8 made in cash, however, the onus was on the assessee to explain with
necessary evidence that the expenses were not excessive and the same
were genuine expenses.
Nothing has been brought before us as to show any infirmity in the
order of the CIT(A).
In view of this, we do not find any infirmity in the order of the
CIT(A) on this issue and the same is upheld.
Ground No.2: Vide this ground of the Cross objections, the
assessee has agitated the action of the CIT(A) in confirming the
disallowance made by the Assessing Officer of deduction claimed u/s
80IB of the Act on DEPB and Duty Draw back. This issue is squarely
covered by the decision of the Hon'ble Supreme Court in the case of
‘Liberty India vs CIT’ [2009] 317 ITR 218 (SC). We, therefore, do not
find any infirmity in the order of the CIT(A). There is no merit in the
Cross objections filed by the assessee.
In the result, the appeal of the Revenue and Cross objections of
the assessee are dismissed.
Order pronounced in the Open Court on 20.08.2019
Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� /Vice President �या�यकसद�य/ Judicial Member Dated : 20.08.2019 “आर.के.”
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana. 9 आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar
ITA No.336-chd-2008 & C.O. 15-c-2008 M/s Shri Ram International, Ludhiana.
[2009] 317 ITR 218 (SC)
[IN THE SUPREME COURT OF INDIA]
LIBERTY INDIA v.
COMMISSIONER OF INCOME-TAX
That the Ld. Commissioner of Income Tax (Appeals) has erred in restricting the addition to 5% of the total expenses of Rs. 1, 19, 34, 080/- against the addition of 10% as made by the Assessing Officer as per page 30 of the order of the CIT (Appeal) . That the Ld. Commissioner of Income tax (Appeals) has 5 . erred in confirming the action of the Assessing Officer in not allowing deduction u/s 80 IB on DEPB and Duty draw back being export incentives as par page JO" 6~f the order of CIT* (Appeal).
That the respondent craves leave to add or amend any ground of cross-objections before the appeal is finally heard or disposed off.