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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
These Cross appeals are arising out of the orders of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-3/IT-133/2012-13 vide order dated 19.10.2016. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-1(3), Mumbai (in short ‘DCIT’/‘ITO’/ AO’) for the A.Y. 2008-09 vide order dated 10.12.2010 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
This appeal contains the quantum addition i.e. deleting the disallowance by admitting the additional evidence in violation of Rule 46A(3) of the Income Tax Rules, 1963 (hereinafter the ‘Rules), wherein the disallowance was at ₹ 52,26,750/- & allow the expenses of ₹ 4,38,867/- on account of employee’s contribution towards PF & ESIC. The tax effect in this appeal is amounting to ₹ 17,58,532/-. When this was confronted to the learned Sr. Departmental Representative he admitted that the tax effect in this appeal is less than ₹ 20 lacs and covered by the CBDT Circular No. 03 of 2018 dated 11.07.2018
We have gone through the circular and noticed that this circular will apply to pending appeals also & we are referring to Para 13 of the circular for this proposition, which reads as under: - “13. This Circular will apply to SLPs/appeals/ cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply ITAs No. 7599 & 326/Mum/2017 retrospectively to pending SLPs/ appeals/cross objections/ references. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed.”
In view of the above, we are of the view that the Revenue’s appeal is fully covered by CBDT circular No. 3 of 2018 and there is no exception brought out by the Revenue that this appeal falls under any of the exception as provided in Para 10 which reads as under: - “10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect:
(a) Where the Constitutional validity of the provisions of an Act or Rule IS under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection m the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts.”
When this was confronted to the learned Sr. Departmental Representative, he could not point out that this appeal falls under any of the exception as provided in Circular No. 3 of 2018. Admittedly, the tax ITAs No. 7599 & 326/Mum/2017 effect in this appeal of Revenue is much below the prescribed limit of filing appeal before the Tribunal i.e. ₹ 20 lacs as per CBDT circular No. 3 of 2018. In view of the above, this appeal of Revenue is dismissed as withdrawn in view of Circular No 3 of 2018.
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the stamp duty expenses. For this assessee has raised the following grounds: - “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the action of the AO in disallowing the stamp duty expenses of ₹ 5,99,9,500/- paid on issue of share certificate treating the same as capital in nature.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) ought to have appreciated that the stamp duty expense are merely documentation charges for issue of share certificates and hence are allowable as deduction under section 37(1) of the Act.”