ACIT, CIRCLE- 21(1), NEW DELHI vs. RATNA COMMERCIAL ENTERPRISES PVT. LTD., NEW DELHI

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ITA 5201/DEL/2017Status: DisposedITAT Delhi27 January 2020AY 2012-134 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 dismissed the appeal as the tax effect was below the monetary limit prescribed by CBDT circulars for filing appeals. The Revenue did not press the appeal, and the assessee argued it was not maintainable.

What were the facts?

The Revenue filed an appeal against the CIT(A)'s order concerning AY 2012-13. The appeal raised grounds regarding the write-off of bad debts and the deletion of additions on account of business promotion expenses.

What were the issues?

Whether the appeal is maintainable due to low tax effect as per CBDT circulars. Whether the write-off of bad debts and business promotion expenses were allowable.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 254(2)

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)- 36, New Delhi, [“Ld. CIT(A)”, for short], dated 12.05.2017 for Assessment Year 2012-13. Grounds taken in this appeal of Revenue are as under:

“1. That on facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the amount of Rs. 37.48 lacs to write off as bad debts u/s 36(1)(iii) of the I.T. Act, 1961. Since, the assessee is an investment company and not a loan company as per NBFC directions and hence write off of loan and advances cannot be considered as normal business activities u/s 36(1)(iii) of the Act.

ITA No.- 5201/Del/2017. Ratna Commercial Enterprises Pvt. Ltd.

2.

That on facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition to the tune of 25% of Rs. 31,59,589/- on account of business promotion expenses. The assessee has claimed these expenses in its profit & loss account without giving any justification or evidence to the effect that these expenses are necessarily incurred for the business of the assessee.

3.

The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or mend any of the grounds of appeal.”

(B) At the outset, Learned Counsel for the assessee brought to our notice, at the time of hearing, that tax effect in this appeal is below Rs. 50,00,000/-. Both sides, [Representatives of Revenue and the Assessee] were in agreement, at the time of hearing before us, that the tax effect in the present appeal is below Rs. 50,00,000/-.

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 of filing of appeals by Revenue in Income Tax Appellate Tribunal 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. Having regard to the aforesaid, the Ld. Sr. Departmental Representative for Revenue did not press the appeal. The learned Counsel for the assessee also submitted that the appeal was not maintainable in view of the aforesaid CBDT Circular dated 08.08.2019 and 11.07.2018; and aforesaid clarification dated 20.08.2019 issued by CBDT. 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. Page 2 of 4

ITA No.- 5201/Del/2017. Ratna Commercial Enterprises Pvt. 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 decision was orally pronounced in the Open Court after conclusion of hearing on the date of hearing. Now, this written order is pronounced in Open Court on 27/01/2020.

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