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Income Tax Appellate Tribunal, DELHI BENCH “I(1
Before: SHRI S.V. MEHROTRA : & SMT. BEENA PILLAI :
This is revenue’s appeal against the order dated 25.01.2011, passed by the ld. CIT(A)-XX, New Delhi, relating to A.Y. 2003-04. Effective grounds raised are as under:
“1. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and merit of the case in allowing exclusion of net bills-in-progress of Rs. 18,70,936/- from total operating cost for the purpose of computing mark-up/taxable income for the year. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in directing to consider five comparable taken by the assessee but rejected by the AO for determining Arms Length Price.
This appeal was originally heard on 27-11-2015, on merits, but refixed on 6-1-2016 in view of the CBDT Circular No. 21/2015 dated 10.12.2015, as the tax effect was prima facie less than Rs. Ten lacs.
Ld. DR submitted that since the appeal has already been heard on merits, therefore, the same should be decided on merits.
Ld. counsel for the assessee submitted that till the passing of the order by the Tribunal, the appeal remains pending before the Tribunal and, therefore, once CBDT has issued instructions with retrospective effect, then the appeal has to be dismissed as not maintainable by the ITAT and should not be decided on merits.
We have considered the submissions of both the parties and have perused the record of the case. Section 254(1) reads as under:
“The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders therein as it thinks fit.”
Ld. counsel referred to Rule 34 of the ITAT Rules which lays down the procedure for pronouncement, signing and dating of orders. His submission was that unless the order is signed and dated, the appeal remains pending.
We find considerable force in the submission of ld. counsel for the assessee that till the pronouncement of the order by the Tribunal, the appeal remains pending before it. Therefore, the CBDT Circular No. 21/2015 dated 10.12.2015 is squarely applicable to all those appeals which have been heard by the Tribunal but the orders were not passed.
CBDT Circular No. 21/2015 dated 10.12.2015 stipulates that no departmental appeal, involving tax effect below Rs.10 lakhs, shall be filed before the ITAT. Para 10 of the Circular specifies that such instruction would apply retrospectively and the pending appeals below the specified tax limit of Rs.10 lakh may be withdrawn/not pressed.
Ld. DR could not controvert the aforementioned factual position. However, in view of clarification given in paragraph 7 of the Circular, we may observe that withdrawal of the appeal by the Revenue on account of low tax effect should not be considered as a precedent in the subsequent years of the acceptance of issues involved in this appeal and, therefore, if in the subsequent year similar issue arises before the ITAT, where the appeal is above the tax limit, as prescribed in this Circular, the same is to be considered on merits. We may further observe that this order would not be considered as an acceptance by the Revenue on the issue involved in this appeal and will not be an estoppel for the Revenue to take up the issue involved in this appeal before the ITAT on merits if the tax effect in those years is more than 10 lakhs.
Since the tax effect involved in the present departmental appeal is below 10 lakhs, therefore, in view of recent CBDT Circular No. 21/2015 dated 10.12.2015, this appeal is not maintainable in terms of section 268A(1) of the Income-tax Act. However, we may clarify that if on receipt of this order, the Assessing Officer finds that the tax effect involved is above Rs.10 lacs or in any other manner, the circular is not applicable in view of exceptions culled out in the circular, he will be at liberty to take such steps, as deem fit, to recall the order.
Keeping in view the aforementioned CBDT Circular and the provisions of section 268A of the Income-tax Act, 1961, without going into merits of the cases, we dismiss the instant appeal filed by the Revenue as tax effect in this appeal is less than Rs.10.00 lacs.
Order pronouncement in open court on 09/02/2016.