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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI A. K. GARODIA & SHRI LALIET KUMAR
Per Laliet Kumar, Judicial Member
These appeals are preferred by the Revenue against the order of the CIT(A), inter alia, on following common grounds:
The Order of the Ld. CIT (A), in so far as it is prejudicial to the interest of the Revenue, is opposed to law and the fact and circumstances of the case.
2. On facts of the case, Whether the decision of the Ld CIT (A) is right in allowing the appeal of the assessee despite the fact that the provisions to section 14A
makes it clear that the expenditure has to be worked out as per Rule 8D(2)(ii) & 8D(2)(iii).
3. On facts of the case, whether the decision of the Ld CIT (A) is right in allowing the appeal of assessee as the same contravenes the provisions of section 14A and also the Ld CIT (A) has not followed the instructions laid down in the Boards Circular No 5/2014 dated 11.02.2014 wherein, the Board's has made it clear that the disallowance u/s 14A r.w.r 8D has to be made even where the tax payer in a particular year has not earned any exempted income.
4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
5. The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged.
At the outset, it is observed that the tax effect involved in these appeals are below Rs.20 lakhs. The CBDT, with a view to reduce unnecessary litigation on their part, has issued a Circular No. 3/2018 dated 11th July, 2018, wherein they have revised the monetary limits for filing of appeals by the Department before the Income Tax Appellate Tribunal, High Courts and Supreme Court. Insofar as the Tribunal is concerned, the monetary limit specified therein is Rs.20 lakhs and the concerned authority has to withdraw its appeal or it need not press the same if tax effect in that appeal is less than Rs.20 lakhs. It is further specified that the tax effect indicated therein is applicable to all pending appeals, though they are filed by the Revenue prior to the issuance of the said circular. It was also clarified that the Assessing Officer has to calculate the tax effect separately for every assessment year in respect of the disputed issue/s in the case of every assessee. If, in the case of an assessee, the disputed issue arises in more than one year(s), appeal(s) can be filed in respect of such assessment year(s) in which tax effect in respect of the disputed issue exceeds the monetary limit specified. In other words, if there are a number of years, if the tax effect is less than the specified limit in one year, appeal cannot be filed or the same has to be withdrawn for that year, for want of tax effect. However, an exception is made to this direction with regard to a combined order passed by and 1089/Bang/2018 Page 3 of 4 the first appellate authority. If in one of the years the tax effect is more than Rs.20 lakhs and the Revenue decides to file an appeal, in respect of other years covered by the said order also, Revenue is eligible to file appeal, even though the tax effect in each of those years is less than Rs.20 lakhs. It was also clarified that merely because the appeal is dismissed for want of tax effect, it does not come in the way of the Department in filing appeal for other years(s), and it does not mean that the Department has acquiesced the issue.
The above circular was specifically made applicable to all pending appeals. In the present case, the tax effect on the addition in dispute, which was deleted by the CIT(A) by the impugned order is indisputably below 20lakhs.
The Legislature in its wisdom has introduced section 268A of the Income Tax Act, 1961, whereby the Board is empowered to issue orders/instructions/directions to the income-tax authorities, fixing the monetary limits for the purpose of regulating the filing of appeals. In the light of the circular dated 11.07.2018, issued by the CBDT in exercise of the powers conferred in it by subsection (1) of section 268A, we are of the view that the appeal filed herein should not have been pressed by the Revenue. The Learned Departmental Representative fairly admitted that the Revenue effect in this appeal is less than the prescribed limit in para-3 of the above circular issued by the CBDT. Having regard to the circumstances of the case, we dismiss the appeals of the Revenue.
However, the Revenue is at liberty to move appropriate application/petition in case it is found that the case is covered by one of the exception(s) carved out in the said Circular.
In the result, the appeals filed by the Revenue are dismissed.
Pronounced in the open court on this 16th day of November, 2018.