DCIT 1(3)(2), MUMBAI vs. TATA MARCOPOLO MOTORS LTD, MUMBAI

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ITA 326/MUM/2017Status: DisposedITAT Mumbai28 January 2019AY 2008-096 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal as withdrawn, citing CBDT Circular No. 3 of 2018, as the tax effect was below the prescribed limit and no exceptions applied. The assessee's appeal was also dismissed as withdrawn because the assessee chose not to press the issue due to the small tax effect.

What were the facts?

The Revenue's appeal concerned a disallowance of ₹52,26,750 and allowance of expenses of ₹4,38,867, with a tax effect below ₹20 lakhs. The assessee's appeal was against the disallowance of stamp duty expenses of ₹5,99,950 paid on the issue of share certificates.

What were the issues?

Whether the Revenue's appeal should be dismissed based on CBDT circular limits for tax effect and whether the assessee's appeal regarding stamp duty expenses should be withdrawn due to small tax effect.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

For Appellant: Shri Nikhil Tiwari, AR
For Respondent: Shri D.G. Pansari, DR

Heard together (2 matters)

ITA No. 7599/Mum/2016
ITA No. 326/Mum/2017

Read from the judgment's own cause title. This page is filed under one of them.

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’).

2.

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

3.

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.”

4.

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.”

5.

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.

6.

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.”

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