What did the Tribunal hold?

The Tribunal held that the appeal by the Revenue is liable to be dismissed on account of low tax effect, as the tax effect involved was significantly less than the monetary limit prescribed by the CBDT for filing appeals.

The Revenue appealed against the CIT(A)'s order which had held the re-opening of assessment as invalid. The assessee argued for dismissal due to low tax effect as per CBDT circular. The Revenue conceded that the tax effect was below the prescribed limit.

What were the issues?

Whether the Revenue's appeal should be dismissed due to low tax effect as per CBDT circulars. The validity of the re-opening of assessment was also a background issue.

ITO vs M/S. Red Wine Shop, Dhule | ITAT Pune 2018

Income Tax Appellate Tribunal, “SMC” BENCH, PUNE

Before: SHRI ANIL CHATURVEDI, AM & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Sunil Ganoo

For Respondent: Shri Mukesh Jha

आदेश / ORDER

PER VIKAS AWASTHY, JM :

The appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-I, Nashik dated 08-06-2016 for the assessment year 2008-09.

2 ITA No. 1920/PUN/2016, A.Y. 2008-09

Shri Sunil Ganoo appearing on behalf of the assessee submitted at the outset that the appeal of the Revenue is liable to be dismissed on account of low tax effect in terms of CBDT circular No. 21/2015, dated 10-12-2015.

Shri Mukesh Jha representing the Department fairly admitted that in the present appeal by the Department, tax effect is less than `10 lakhs.

Both sides heard. The Revenue is in appeal against the order of Commissioner of Income Tax (Appeals) in allowing assessee’s claim of License Fee Rs.4,70,981/- paid to Excise Department as revenue expenditure. In original assessment proceedings u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), the claim of assessee was accepted. The assessment was-reopened to make disallowance holding the expenditure to be capital. The Commissioner of Income Tax (Appeals) held the re-opening of assessment as bad in law and invalid. Hence, the present appeal by the Department.

As per demand notice issued to the assessee, the tax effect involved in appeal is Rs.62,868/- which is far less than the monetary limit prescribed by CBDT for filing of appeal by the Department before the Tribunal. The CBDT vide circular No. 21/2015, dated 10-12-2015 has raised the monetary limit of tax effect for filing of appeals by the Department before the Tribunal to `10 lakhs. Thus, in view of CBDT circular, the present appeal of the Revenue is liable to be dismissed on account of low tax effect.

3 ITA No. 1920/PUN/2016, A.Y. 2008-09

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court at the time of hearing on Monday, the 19th day of February, 2018.

Sd/- Sd/- (अननऱ चतुवेदी / Anil Chaturvedi) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 19th February, 2018 RK आदेश की प्रनतलऱवऩ अग्रेवर्त / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-1, Nashik 3. 4. The Pr. Commissioner of Income Tax-1, Nashik ववभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण एक सदस्य मामऱा बेंच, 5. ऩुणे / DR, ITAT, “SMC” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रनत // True Copy// आदेशानुसार / BY ORDER,

ननजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune

INCOME-TAX OFFICER vs. M/S. RED WINE SHOP, DHULE

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