What did the Tribunal hold?

The Tribunal held that the tax effect in the appeal was below the monetary limit prescribed by the CBDT circulars for filing appeals. Therefore, the appeal was not maintainable.

The Revenue filed an appeal before the ITAT against an order of the CIT(A). The assessee argued that the appeal was not maintainable due to low tax effect as per CBDT circulars.

What were the issues?

Maintainability of the Revenue's appeal before the ITAT due to low tax effect as per CBDT circulars.

ITO vs Jullunder Model School, Jalandhar | ITAT Amritsar 2022

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

Hearing: 14.11.2022Pronounced: 15.11.2022

ORDER Per Dr. M. L. Meena, AM:

This appeal has been filed by the Revenue against the impugned order dated 29.04.2022 passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi in respect of the Assessment Year 2017-18.

At the outset, the ld. counsel submitted that the department appeal is not maintainable on account of low tax effect in view of CBDT Circular No.

2 ITO v. Jullunder Model School 3/2018 dated 11th July, 2018 issued on the subject of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court as measures for reducing litigation.

The ld. counsel has referred to point no. 4 of the aforementioned Circular No. 3/2018 which reproduced as under:

“4. For this purpose, ‘tax effect’ means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as ‘disputed issues’). Further, ‘tax effect’ shall be tax including applicable surcharge and cess. However, the tax will not include any interest thereon, except where changeability of interest itself is in dispute. In case the changeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.”

From the intimation u/s 143(1) of Income Tax Act for the assessment year 2017-18 issued by the department in the case of the assessee. It is seen that tax payable with the net tax liability has been computed at Rs. 40,75,790/- by the department against the assessee which is less than the monetary tax limits of Rs. 50,00,000/- prescribed for filing appeal by the department before the tribunal vide latest CBDT Circular No. 17/2019 dated 8th August, 2019 and therefore, in the light of the CBDT circular dated 8th

3 ITO v. Jullunder Model School August 2019, whereby the income tax department has announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the case in which overall tax effect, including surcharge but excluding interest, is Rs 50,00,000/- or less and thus, the appeal of the Revenue is liable to be dismissed as non maintainable. The ld. DR has nothing to submit in rebuttal.

The Hon’ble Apex Court has dismissed the Revenue appeal in the case of DCIT v. Keshav Power Ltd. (SLP/Civil No. 21497/2019) vide order dated 16th August, 2019 on account of low tax effect, considering the revised monetary limits of Rs. 2 crores as per the aforesaid circular.

We make it clear that appellant shall be at liberty to revive the appeal either owing to wrong computation of tax effect or owing to being covered by the permissible exceptions as per para 10 of circular dated 11.07.2018.

7. In view of above, the appeal of the department, involving tax effect of less than Rs.50,00,000/- is hereby dismissed as not maintainable.

In the result, the appeal filed by the Revenue is dismissed.

INCOME TAX OFFICER ( EXEMPTIONS) WARD, JALANDHAR vs. JULLUNDER MODEL SCHOOL, JALANDHAR

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