ACIT CEN CIR 32, MUMBAI vs. ACKRUTI CITY LTD, MUMBAI

The revenue has challenged the impugned order on following effective grounds:- 1. “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made u/s 2(22)(e) of the Act holding that the loan received by the assessee from its 100% subsidiary is not in the manner of deemed dividend though the total accumulated profit of the subsidiary during the current year is Rs. 18,90,324/-.”

At the outset, the Ld. Counsel for the assessee submitted that the tax effect in this case is below 10 Lakhs and as per the CBDT Circular No. 21 of 2015, dated 10-12-2015, the present appeal is not maintainable. The Ld. Counsel also placed on record a calculation sheet, as per which the total tax effect on addition under section 2(22)(e) of the Income Tax Act, 1961(in short ‘the Act.’) comes to Rs. 6,40,820/-.

The Ld. Counsel further submitted that the ground no.2 pertains to computation of book profit, and the tax effect thereof is irrelevant because as per assessment order dated 05/03/2013 passed u/s 143(3) of the Act, the tax payable under the normal provisions of the Act is higher than the tax payable u/s 115JB of the Act.

The Ld. DR fairly conceded that the tax effect in department’s appeal is below 10 Lakhs. We find that the issue raised in appeal does not fall under any of the exceptions specified in para 8 of the Circular. Since, it has been specifically clarified in the Circular aforesaid that the instruction will apply retrospectively to all the pending appeals, the present appeal filed by the revenue is not maintainable. We, therefore, dismiss the appeal in limine.