Loading judgment…
Facts
The Revenue filed an appeal against the order of the CIT(A) which deleted an addition made by the AO regarding excess depreciation claimed on aircraft. The assessee also filed an appeal raising several grounds. The primary dispute in the Revenue's appeal pertains to an excess claim of depreciation on aircraft amounting to Rs. 27,38,017.
Held
The Tribunal noted that the tax effect relating to the grounds of appeal raised by the Revenue was below the monetary limit prescribed by CBDT Circular no.9 of 2024. Therefore, the Revenue's appeal was dismissed as not maintainable. Consequently, the assessee's grounds of appeal were dismissed as not pressed.
Key Issues
Whether the Revenue's appeal is maintainable due to its tax effect being below the prescribed monetary limit as per CBDT Circular. Consequently, whether the assessee's grounds of appeal are to be dismissed as not pressed.
Sections Cited
250, 148, 234D, 41(1), 80HHC, 80HH, 80-IA, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
The present cross-appeal has been filed by the assessee and the Revenue against the impugned order dated 26/09/2005, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-XXVII, Mumbai, [“learned CIT(A)”], for the assessment year 1997-98.
In its appeal, the Revenue has raised the following grounds: -
“"On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition made by the A.O. By withdrawal of excess depreciation claimed by the assessee company amounting to Rs.27,38,017/-" "On the facts and in the circumstances of the case and in law, the CIT(A) has ignored the value of aircraft taken in Wealth Tax assessment for 1995-96 at Rs.1,70,00,000/-. The depreciation was allowed at WDV Rs.3,06,70,085/- as against WDVRs.1,70,00,000/-." "The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored."”
While the assessee has raised the following grounds in its appeal: -
1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in upholding the validity of the re-opening under section 148 of the Act.
2. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in holding that the levy of interest under section 234D is not an appellable issue.
3. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in following the findings given in the appellate order dated 11" March, 2005 in appeal no. CIT(A) XXVII / DCIT Cir. 3(1)/IT9/04-05 in respect of the following issues: (a) In declining to pass a judgement in respect of the action of the Assessing Officer in including excise duty and custom duty while valuing closing stock but allowing the same under section 43B, on the ground that the issue is academic.
& 7341/MUM/2005 (A.Y. 1997-98) 3
(b) In upholding the action of the Assessing Officer in including a sum of Rs.23,71,572/- being sundry credit balances written back under the provisions of section 41(1) of the Act. (c) In holding that miscellaneous receipts amounting to Rs.50,78,91,907/- comprising of scrap sales, miscellaneous scrap sales and sundry sales, ought to be included in ‘total turnover’ for the purpose of computing deduction under section 80HHC. (d) In rejecting the appellant's claim that for the purpose of computation of 'indirect costs' in respect of traded goods exported as per section 80HHC(3)(b), those costs which have been incurred for the purpose of manufacturing, having no connection with the trading activity carried on by the appellant, ought to be excluded. (e) The appellant submits that 'other expenses' included items that had not been allowed as a deduction in the assessment order and accordingly, in any case, the said items ought not to have been included as part of the indirect costs while computing 'indirect costs' attributable to the export of trading goods for the purpose of deduction under section 80HHC. (f) The appellant submits that while computing 'indirect costs'attributable to theexport of trading goods for the purpose of deduction under section 80HHC, the Assessing Officer ought to be directed to exclude expenses attributable to other income and export incentives estimated at 10% thereof. (g) In upholding the action of the Assessing Officer and holding that eligible profits for the purpose of deduction under sections 80HH and 80-IA have to be computed after excluding the following incomes: Particulars Plant II Plant III (Deduction u/s. (Deduction u/s. 80HH) 80-IA) Other Miscellaneous Receipts 5,04,772 46,23,581 Duty Draw Back/Cash Assistance 2,360 17,66,412 Sundry Credit Balances appropriated 29,419 17,627 Interest 14,673 1,10,074 (h) The appellant submits that if at all the aforesaid items are to be excluded then only the net interest and the net cost of raw materials, net of duty drawback received ought to be taken into account while computing the profits of the eligible undertakings. Similarly, recovery of cost through miscellaneous receipts ought to be taken into account while computing profits of the eligible undertakings. (i) The appellant submits that just as only income 'derived from' the undertaking is included in the profits for the purpose of computing deduction under sections80HH and 80-IA, then, the same norm should also apply to expenditure and accordingly, expenditure which has no direct nexus with the undertaking ought not to be considered.”
& 7341/MUM/2005 (A.Y. 1997-98) 4
At the outset, we noticed that the only addition made by the Assessing Officer (“AO”) vide order dated 31/03/2005 passed under section 143(3) read with section 147 was on account of an excess claim of depreciation on aircraftamounting to Rs.27,38,017. The learned CIT(A), vide impugned order, directed the AO to delete the addition of Rs.27,38,917 in respect of the excessclaim of depreciation on aircraft. Being aggrieved, the Revenue is in appeal before us and has raised the afore-mentioned grounds.
Since the only addition under dispute in Revenue’s appeal is amounting to Rs.27,38,017 on account of the excess claim of depreciation on aircraft, it is but obvious that the tax effect relating to the grounds of appeal raised by the Revenue is below the monetary limit of Rs.60 lakh, applicable to appeals before the Tribunal, as per CBDT Circular no.9 of 2024, dated 17/09/2024. In this regard, the learned Authorised Representative (“learned AR”) submitted that none of the exceptions as provided in the aforesaid CBDT Circular would apply to Revenue’s appeal and the Revenue’s appeal being covered under the aforesaid Circular is not maintainable.
The learned Departmental Representative could not produce any material before us to controvert the submission so made on behalf of the assessee.
Having considered the submissions and perused the material available on record, we are of the view that the tax effect relating to the grounds of appeal raised by the Revenue in the present appeal is below the monetary limit of Rs. 60 lakh as per CBDT Circular no.9 of 2024, dated 17/09/2024. In & 7341/MUM/2005 (A.Y. 1997-98) 5 view of the aforesaid, Revenue’s appeal deserves to be dismissed. However, the Revenue is granted the liberty to seek recall of this order if, at a later point in time, it is found that the appeal falls under any of the exceptions provided in the Circular referred to above.
During the hearing, the learned AR submitted that if the Revenue’s appeal is dismissed then the assessee will not press the grounds raised by it in its appeal. Since we have dismissed the Revenue’s appeal, therefore, considering the submissions of the learned AR, the grounds raised by the assessee in its appeal are dismissed as not pressed. However, if subsequently the Revenue’s appeal is recalled on the basis that the Revenue’s appeal falls under any of the exceptions provided in the Circular referred to above, in such a case we direct that the assessee’s appeal be also restored in the interest of justice.
In the result, the present cross-appeal filed by the assessee and the Revenue are dismissed. Order pronounced in the open Court on 12/11/2024