ACIT, FARIDABAD vs. M/S SUMITY EDUCATION SOCIETY, FARIDABAD

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ITA 3017/DEL/2011Status: DisposedITAT Delhi26 September 2016AY 2004-053 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Department's appeal was not maintainable as the tax effect was below the monetary limit prescribed by CBDT Circular No. 21/2015. The Tribunal noted that pending appeals below the specified tax limits should be withdrawn or not pressed.

What were the facts?

The Department appealed the CIT(A)'s decision to allow an exemption of Rs. 27,36,327/- to the assessee society. The AO had treated this excess income as business income, arguing the society engaged in activities beyond its charitable purpose for which registration was granted.

What were the issues?

Whether the Department's appeal is maintainable given the tax effect is below the prescribed monetary limit by CBDT circular. Whether the assessee society's activities were beyond its charitable purpose.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: SHRI H.S. SIDHU & SHRI O.P. KANT

This appeal filed by the Department is directed against the Order dated 31.3.2011 of Ld. CIT(A), Faridabad pertaining to assessment year 2004-05 on the following grounds:- i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred both, on facts and in law, in allowing the exemption of Rs. 27,36,327/- on account of excess of income over expenditure, which the AO has treated as business income in view of the fact the assessee society was engaged in carrying out activities other than the charity activities for which the registration u/s. 12AA as granted. ii) That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal.

2.

We have heard both the parties and perused the material on record. At the threshold, we find that the tax effect in the Revenue Appeals is less than Rs.10,00,000/-, therefore, the Department’s Appeals are not maintainable, in view of the Circular No. 21/2015 dated 10th December, 2015 issued vide F.No.

279/Misc. 142/2007-ITJ (Pt.) by the CBDT. For the sake of convenience, the relevant para nos. 3 & 10 of the aforesaid CBDT’s Circular are reproduced as under:-

“3. Henceforth, appeals/ SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: Monetary Limit S No Appeals in Income-tax matters (in Rs) 1 Before Appellate Tribunal 10,00,000/- 2 Before High Court 20,00,000/- 3 Before Supreme Court 25,00,000/-

It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.

10.

This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/ Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.”

3.

It is not in dispute that the Board’s instruction or directions issued to the income-tax authorities are binding on those authorities, therefore, the Department should have withdrawn/ not pressed the present Appeal, in view of the aforesaid instructions since the tax effect in the instant Appeal is less than the amount of Rs. 10 lacs, prescribed in the above said CBDT’s Instructions.

4.

Keeping in view the CBDT Instruction No. 21/2015 dated 10th December, 2015, we are of the view that the Revenue should have withdrawn/ not pressed the instant appeal before the Tribunal. We are also of the view that the said Instructions are applicable for the pending appeals and appeals to be filed henceforth in Tribunal.

5.

In the result, both the Appeals filed by the Revenue stand dismissed.

Order pronounced in the Open Court on 26/09/2016.

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