DCIT CEN CIR 42, MUMBAI vs. SANKALCHAND C. JAIN, MUMBAI

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ITA 7662/MUM/2010Status: DisposedITAT Mumbai20 January 2016AY 2005-064 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 dismissed the Revenue's appeal following a CBDT circular that set monetary limits for filing appeals. The total demand in the case was below the prescribed limit for appeals before the Tribunal.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the addition of Rs. 16,02,420/- which was treated as deemed dividend. The CIT(A) held that nothing could be brought to tax as deemed dividend because the credit in the assessee's capital account exceeded the debit.

What were the issues?

Whether the payment to a shareholder exceeding his profit sharing ratio in a firm constitutes deemed dividend. The applicability of CBDT's monetary limits for filing appeals.

Which sections of the Income-tax Act were involved?

Section 2(22)(e)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR

Hearing: 20.01.2016Pronounced: 20.01.2016

O R D E R

PER C.N. PRASAD, JM:

1.

This appeal by the Revenue is preferred against the order of the Ld. CIT(A)-36, Mumbai dated 28.01.2010 pertaining to assessment year 2005-06.

2. The grounds raised by the Revenue read as under:

“1. On the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in law in holding that nothing can be brought to tax as ‘deemed dividend’ because in the capital account of the assessee in the books of accounts of the firm M/s. Supershwa Constructions, the amount of credit was exceeding debit amount. 2. the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in law in deleting the addition of Rs. 16,02,420/- because in this case the payment was available for individual benefit of the share holder to the extent of his profit sharing ration in the firm and hence the same was deemed dividend u/s. 2(22)(e) of the Act, and thus in ignoring the ratio laid down wby the Hon’ble S.C. in Mukundray K. Shah (2007) 160 Taxman 276 (SC).”

3. Before going into the merits of the case, we consider CBDT’s latest instructions vide Circular No.21/2015 dated 10/12/2015, the relevant portion of which read as under:-

“ Circular No. 21/2015 F No 279/Misc. 142/2007-ITJ (Pt) Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes New Delhi the 10th December, 2015

Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court - measures for reducing litigation - Reg –

Reference is invited to Board's instruction No 5/2014 dated 10.07.2014 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal and High Courts and SLP before the Supreme Court were specified.

2.

In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal and High Courts and SLP before the Supreme Court keeping in view the monetary limits and conditions specified below.

3.

Henceforth, appeals/ SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: -

S. Appeals in Income-tax Monetary Limit No 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.”

4.

It is further clarified by the Board in its circular that these instructions will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts and Tribunals. It is also made clear that pending appeals below the monitory limits fixed in para-3 above may be withdrawn or not pressed.

5.

In the case in hand, the total demand as per CIT(A)’s order is less than the amount of Rs. 10,00,000/-,which is below the monetary limits as mentioned in CBDT Circular dated 10.12.2015 (supra). Following the same, this appeal of the Revenue is dismissed.

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