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Facts
The Revenue filed an appeal against the CIT(A)'s order, which had allowed substantial relief to the assessee. The assessee, a charitable society, claimed exemption under Section 10(23C)(iiiad) for AY 2017-18, stating they incurred a deficit despite gross receipts. The Revenue's appeal was based on additions made by the AO, assessing income on gross receipts.
Held
The Tribunal noted that the Revenue's appeal was not maintainable due to low tax effect, citing a CBDT circular. Both parties agreed that the tax effect was below the threshold for filing an appeal. Therefore, the appeal was dismissed in limine.
Key Issues
Whether the Revenue's appeal is maintainable before the ITAT considering the low tax effect as per CBDT circulars, and whether the assessee is eligible for exemption under Section 10(23C)(iiiad).
Sections Cited
10(23C)(iiiad)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’, LUCKNOW
Before: SHRI SUDHANSHU SRIVASTAVA & SHRI ANADEE NATH MISSHRA
(A) This appeal has been filed by Revenue against the impugned appellate order dated 14/09/2020 for assessment year 2017-18 of learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. Cross Objection has been filed by the assessee.
(B) At the time of hearing before us, learned Counsel for the assessee submitted that the appeal filed by Revenue is not maintainable due to low tax effect. On perusal of records we find that the assessee has submitted written submissions dated 14/12/2024 raising objection on behalf of the assessee, which are reproduced below:
“WRITTEN SUBMISSION/TECHNICAL OBJECTIONS ON BEHALF OF RESPONDENT:
The humble appellant most respectfully submits as under:-
That the above mentioned appeal has been filed by the Income Tax Department against order of Ld. CIT (A) dated 14.09.2020 wherein substantial relief was allowed to the Respondent.
That the disputed tax involved in this case is at Rs. 45837427- (with Surcharge, Cess and without Interest) and interest amount is Rs.18,77,554/- aggregating demand at Rs.64,61,335/- against addition covered in Ground of Appeal at Rs.59,03,827/- as per para-10 of Form-36. The calculation of tax effect is enclosed being notice of demand along with computation sheet dt. 09/12/2019 being part of assessment order. Annex-1.
3. That the Revenue mentioned tax effect at para-10 of Form-36 of Rs.64,61,335/- is inclusive of interest of Rs.18,77,554/- which is apparent from record.
4. That vide Circular No. 09/2024 issued by the CBDT, New Delhi, the Income Tax Department has been directed to not file Appeals and to withdraw pending appeals before the Hon'ble ITAT where the tax effect involved is upto Rs. 60 Lacs.
That in the present case the disputed tax involved is Rs.45,83,742/- being below 60 lacs, therefore the Appellant Department is bound to not pursue the present appeal and to withdraw the same accordingly.
That it is therefore requested that the present appeal filed by the Appellant Department may kindly be dismissed in the interest of justice.”
(B.1) Later on, the assessee filed revised written submissions/ gist of the case dated 20/01/2025, which is reproduced as under:
GIST OF THE CASE ON BEHALF OF RESPONDENT; The humble appellant most respectfully submits as under: - That in the relevant year assessee being charitable society imparting education and affiliated with Lucknow University for carried out courses B.A. & B. Com. etc. That as per Audited Financial Statement for relevant year the gross receipts for its educational activities were at Rs. 59,03,827/- against which expenses incurred Rs. 59,38,860/- and incurred deficit of Rs. 35,033/-. The gross receipts were below Rs. One Crore from educational activities and eligible for exemption u/s 10(23C)(iiiad) for the Act. Inadvertently ITR for relevant year was filed in form-5 and complete compliance could not be made before AO, resulting to which AO while passing the assessment order dt. 09/12/2019 for relevant year assessed the income on gross receipts of Rs. 59,03,827/-, without allowing related expenses claimed against the revenue.
2. The Ld. CIT(A)-1, Lucknow vide Order dt. 14/09/2020 has allowed the appeal and after due verification of supporting documents objects & activities of Institution held that the appellant is eligible for exemption u/s 10(23C)(iiiad) of the Act. However the AO has not examined the allow ability of deduction/exemption u/s 10(23C)(iiiad) as evident from the assessment order, hence, the AO is directed to examine whether the appellant has fulfilled all conditions mentioned in the section 10(23C)(iiiad) by conducting relevant inquiries if required and allow the above deduction/exemption in case all the conditions are fulfilled.
That on identical facts of AY 2016-17, appeal of Revenue and CO 08/LKW/2021 Hon'ble IT AT, Lucknow bench has decided on 15.09.2022 where tax effect involved in the appeal was below the Rs. 50 lakhs and held as under:-
"4. In view of the above, I dismiss the appeal of the Revenue for low tax effect. Since the appeal of the revenue has been dismissed, the cross objections filed by the assessee has become infructuous and is dismissed. "
That for AY 2017-18 the tax effect is Rs. 45,83,742/- (and interest Rs. 18,77,554/- aggregating Rs. 64,61,335/- as mentioned in para 10 of Form 36). In support of which Notice of demand alongwith computation sheet dated 09.12.2019 issued alongwith assessment order has already been submitted on 16/12/2024 (Annex-1).”
(B.2) As instructed by Central Board of Direct Taxes, for filing the appeal in Income Tax Appellate Tribunal against order of the learned CIT(A), if the tax effect is upto Rs.60,00,000/- no appeal should be filed by Revenue before the Income Tax Appellate Tribunal. Representatives of both sides, the learned Sr. D.R. for Revenue and the learned Counsel for the assessee were in agreement that the tax effect being below Rs.60 lac, the appeal filed by Revenue is not maintainable and should be dismissed.
(C) In view of foregoing and as representatives of both sides are in agreement on this, the appeal of Revenue dismissed in limine without going into the merits of the case.
(D) In the result, the appeal filed by the Revenue is dismissed as not maintainable.
(E) Since we have dismissed the appeal of Revenue as not maintainable due to low tax effect, the Cross Objections filed by the assessee has become infructuous and is dismissed.
(F) In the result, the appeal of Revenue and Cross Objection of the assessee are dismissed.
(Order pronounced in the open court on 06/02/2025)