ITO vs. SMT. KAMALA S. KANDHAI,

Per N.V. Vasudevan, Judicial Member

This appeal is by the revenue against the order dated 19.6.2013 of the CIT(Appeals), LTU, Bangalore relating to assessment year 2004-05. 2. The only issue that arises for consideration in this appeal is as to whether the CIT(Appeals) was justified in allowing the long term capital loss of Rs.13,20,878 on sale of imported car.

High Court held that CBDT Instruction No.5/2014 is retrospective in operation and the said Instruction will apply to appeals filed earlier, which are pending adjudication as on the date, when the Instruction has come into force. In the light of the above CBDT Instruction, ld. counsel for the assessee prayed that the appeal of the revenue has to be dismissed as not maintainable.

“The Government has formulated the National Litigation Policy with a view to ensure conduct of responsible litigation by the Central Government and urges every State Government to evolve similar policies. Its aim is to transform Government into an efficient and responsible litigant. The purpose underlying this policy is also to reduce Government litigation in courts so that valuable Court time would be spent in resolving other pending cases, so as to achieve the Goal in the National Legal Mission to reduce average pendency time from 15 years to 3 years. Instruction no. 3/2011 is issued subsequent to the aforesaid National Litigation Policy. A perusal of the aforesaid policy makes it clear that though the said instruction was issued as a measure for reducing litigation, it was issued in supersession of the earlier instruction enhancing the monetary limits and prescribing certain conditions. In the instant case, the Instruction no. 3/2011 is more beneficial than Instruction no. 2/2005. If instruction no. 3/2011 is also made applicable to the pending appeals before the High Court, it would grant relief to the assessee. Apart from granting relief to the assessee, if number of appeals pending before the High Court are disposed of on the basis of the said circular, the precious time which would be saved by the High Court could be better utilized for deciding disputes where tax effect is enormous. That apart, the duration, an appeal takes in the High Court would be reduced as desired by the National Litigation Policy. The object sought to be achieved by such circulars/instructions and also the law declared by the Apex Court, the National Litigation Policy 2011 as well as the various schemes introduced by the Department granting relief to persons who have not even filed returns and paid taxes, are kept in mind, to bring the circular/instruction in harmony with the National Litigation Policy, it would be appropriate to hold that the benefit of such circular/instruction also applies to the pending cases in appeal in various Courts and Tribunals on the date of the circular/instruction. Therefore, the Instruction no. 3/2011 is also applicable to the pending appeals and as the tax effect in the instant case is less than Rs.10 lakhs, the appeal stands dismissed on the ground of monetary limit, without expressing any opinion on the merits of the claim.”

“(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department.”

In the result, appeal by the revenue is dismissed.

Bangalore, Dated, the 14th May, 2015. /D S/

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