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Facts
The Revenue filed an appeal against the CIT(A)'s order for the Assessment Year 2016-17. The appeal challenged the deletion of an interest adjustment on outstanding receivables from Associated Enterprises (AEs) under section 92B and the allowance of an appeal regarding disallowance under section 14A concerning investments made for exempt income.
Held
The tribunal dismissed the Revenue's appeal as not maintainable, after the assessee's representative submitted that the appeal was covered by CBDT Circular No. 09 of 2024, dated 17.09.2024, which sets a monetary limit of Rs. 60 Lakhs for tax effect in appeals. The Ld. CIT.DR for the Revenue admitted the circular's applicability. The tribunal, however, granted the Revenue the liberty to seek restoration of the appeal if the circular is found to be inapplicable.
Key Issues
Whether the Revenue's appeal is maintainable given that the tax effect falls below the monetary limit prescribed by CBDT Circular No. 09 of 2024.
Sections Cited
92B, 14A
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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI ANUBHAV SHARMASHRI ANUBHAV SHARMA
ORDER
PER PRADIP KUMAR KEDIA PRADIP KUMAR KEDIA, AM :
The captioned appeal has been filed at the instance of the The captioned appeal has been filed at the instance of the The captioned appeal has been filed at the instance of the Revenue against the order of the Revenue against the order of the Ld. CIT(A)-44 [“Ld. CIT(A)”], dated CIT(A)”], dated 07.03.2022 concerning assessment year 20 concerning assessment year 2016-17.
The grounds of appeal
raised by the Revenue read as under: The grounds of appeal raised by the Revenue read as under:- The grounds of appeal raised by the Revenue read as under: 1. “On the facts & under the circumstances of the case, the On the facts & under the circumstances of the case, the On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in deleting the adjustment of Rs. Ld. CIT(A) has erred in deleting the adjustment of Rs. Ld. CIT(A) has erred in deleting the adjustment of Rs. 1,18,14,779/ 1,18,14,779/- on on account account of of interest interest charged charged on on outstanding recei outstanding receivable from the AEs to the income of the vable from the AEs to the income of the assessee even when the provisions of section 92B have assessee even when the provisions of section 92B have assessee even when the provisions of section 92B have been been been amended amended amended by by by The The The Finance Finance Finance Act, Act, Act, 2012 2012 2012 with with with retrospective amendment from 01.04.2002. retrospective amendment from 01.04.2002.
2. On the facts & under the circumstances of the case, the On the facts & under the circumstances of the case, the On the facts & under the circumstances of the case, the Ld. CIT(A) has erre Ld. CIT(A) has erred in holding that interest on receivables d in holding that interest on receivables from AEs con not be charged if the margin of the assessee from AEs con not be charged if the margin of the assessee from AEs con not be charged if the margin of the assessee is better than that of comparables after allowing working is better than that of comparables after allowing working is better than that of comparables after allowing working capital adjustment ignoring the fact that the receivables capital adjustment ignoring the fact that the receivables capital adjustment ignoring the fact that the receivables were outstanding beyond agreed term. were outstanding beyond agreed term.
3. On the facts & under the circumstances the case, the Ld. On the facts & under the circumstances the case, the Ld. On the facts & under the circumstances the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on CIT(A) has erred in allowing the appeal of the assessee on CIT(A) has erred in allowing the appeal of the assessee on disallowance u/s 14A ignoring the fact that the assessee disallowance u/s 14A ignoring the fact that the assessee disallowance u/s 14A ignoring the fact that the assessee failed to prove that investment resulting in exempt income failed to prove that investment resulting in exempt income failed to prove that investment resulting in exempt income were made out of own fun were made out of own funds and not from interest bearing ds and not from interest bearing borrowed funds. borrowed funds.”
At the time of hearing, it was submitted by the Ld.AR for the At the time of hearing, it was submitted by the Ld.AR for the At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently assessee that the appeal filed by the Revenue is hit by recently assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.09 of 2024 CBDT Circular No.09 of 2024 dated 17.09.2024 17.09.2024 revising the previous thresholds pertaining to tax effects. As per aforesaid resholds pertaining to tax effects. As per aforesaid resholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be Circular, all pending appeals filed by Revenue are liable to be Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect dismissed as a measure for reducing litigation where the tax effect dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised does not exceed the prescribed monetary limit which is now revised does not exceed the prescribed monetary limit which is now revised at Rs.60 Lakhs. In the instant case, the tax effect on the disputed Rs.60 Lakhs. In the instant case, the tax effect on the disputed Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 issues raised by the Revenue is stated to be not exceeding Rs.60 issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be lakhs and therefore, appeal of the Revenue is required to be lakhs and therefore, appeal of the Revenue is required to be dismissed in limine.
The Ld.CIT.DR DR DR for for for the the the Revenue Revenue Revenue fairly fairly fairly adm admitted adm the applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, Accordingly, Accordingly, appeal appeal appeal of of of the the the Revenue Revenue Revenue is is is dismissed dismissed dismissed as as as not not not maintainable. However, it will be open to the Revenue to seek maintainable. However, it will be open to the Revenue to seek maintainable. However, it will be open to the Revenue to seek restoration of its appeal on showing inapplicability of the a restoration of its appeal on showing inapplicability of the aforesaid restoration of its appeal on showing inapplicability of the a CBDT Circular in any manner. CBDT Circular in any manner.
In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on Order pronounced in the open Court on 20th November, 2024. November, 2024.