By Mr. K v. Aravind, Adv

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 20 DAY OF JULY 2ZO18 PRESENT THE HON'BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA| I.T.A.No.151/2010 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX, C.R.BUILDING, QUEENS ROAD, BENGALURU. oO .THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(3), C.R.BUILDING,QUEENS ROAD, BENGALURU.CENTRAL CIRCLE-2(3), C.R.BUILDING,QUEENS ROAD, BENGALURU. _. APPELLANT (BY MR. K. V. ARAVIND, ADV.) AND: M/S. UNITED BREWERIES (HOLDINGS) LTD.,(FORMERLY M/S. UNITED BREWERIES LTD..,)UB TOWERS, LEVEL 4 (4 FLOOR),UB CITY, 24, VITTAL MALLYA ROAD,BBNGALURU — 560 OO1. ~ RESPONDENT (BY MRS. 8S. R. ANURADHA, ADV.) Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., THIS LT.A IS FILED U/s.2600-A OF I.T.ACT, 1961,|PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS|OF LAW STATBKD THERBIN AND ALLOW THE APPEAL ANDSET ASIDE THR ORDER PASSED BY THE INCOME-TAXAPPELLATETRIBUNAL,BENGALURU,INITA|No.61/BANG/2009 DATED 20.11.2009 AND CONFIRM THE|ORDER PASSED BY THE ASSISTANT COMMISSIONER OFINCOME TAX, CENTRAL CIRCLE-2(3), BENGALURU IN THE|INTEREST OF JUSTICE AND EQUITY & ETC., THIS JI.T.A. COMING ON FOR HEARING THISDAY,Dr. VINEET KOTHARIJT MADEB THR FOLLOWING:- ORDER Mr.K.V.Aravind,Adv. for Appellants-RevenueMrs.S.R.Anuradha, Adv. for Respondent -.Assessee 1. Both the learned counsels have brought to thenotice of this Court that the Central Board of Direct|Taxes, Department of Revenue, Ministry of Finance,Government of India, New Delhi, has recently issued arevisedCircular No.3/2018, dated 11[th]July, 2018, Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 3/13 revising the monetary limits for filing appeals by theDepartment before the Income Tax Appellate Tribunal, High Courts and Supreme Court and the earliermonetary limits for the High Courts is upwardly revised fromRs.20,00,000 to Rs.50,00,000/- w.e.f. 11[th]July, 2018.The said Circular is quoted below; “Circular No. 3/2018 F No. 279/ Misc. 142/2007-ITJ (Pt)Government ofIndiaMinistry ofFinanceDepartment of RevenueCentral Board Direct Taxes New Delhi the 11[th]July, 2018 Subject:Revision of monetary limits for|filing of appeals by the Department before|Income Tax Appellate Tribunal, High Courts|and SLPs/ appeals before Supreme Court-measures for reducing litigation-Reg. Reference is invited to Board’s CircularNo.2]-Of|2QO15dated.10.12.2015|wherein|monetary limits and other conditions for filingdepartmental appeals (in Income-tax matters)before Income Tax Appellate Tribunal, HighCourts and SLPs/ appeals before Supreme Courtwere specified. 2. In|supersessionof the above Circular, it has been decided by the Board that departmentalappeals may be filed on merits before Income TaxAppellate Tribunal and High Courts and SLPs/appeals before Supreme Court keeping in viewthe monetary limits and conditions specifiedbelow). 3. Henceforth, appeals/ SLPs shall not befiled in cases where the tax effect does not exceedthe monetary limits given hereunder: It is clarified that an appeal should not be filedmerely because the tax effect in a case exceedsthe monetary limits prescribed above. Filing ofappeal in such cases 1s to be decided|on meritsof the case. 4. For this purpose, ‘tax effect’ means the)difference between the tax on the total incomeassessed and the tax that would have been Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 5/13 3. Henceforth, appeals/ SLPs shall not befiled in cases where the tax effect does not exceedthe monetary limits given hereunder: It is clarified that an appeal should not be filedmerely because the tax effect in a case exceedsthe monetary limits prescribed above. Filing ofappeal in such cases 1s to be decided|on meritsof the case. 4. For this purpose, ‘tax effect’ means the)difference between the tax on the total incomeassessed and the tax that would have been Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 5/13 chargeable had such total income been reduced|by the amount of income in respect of the issuesagainst 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, exceptwhere chargeability of interest itself is in dispute.In case the chargeability of interest is the issueunder dispute, the amount of interest shall be thetax effect. In cases where returned loss isreduced or assessed as income, the tax effectwould include notional tax on disputed additions.In case ofpenalty orders, the tax effect will meanquantum of penalty deleted or reduced in theorder to be appealed against. o. The Assessing Officer shall calculate thetax effect separately for every assessment year inrespect of the disputed issues in the case of everyassessee. If, in the case of an assessee, thedisputedissuesArisein|morethanOTLEassessment year, appeal can be filed in respect ofsuch assessment year or years in which the taxeffect in respect of the disputed issues exceedsthe monetary limit specified in para 3. No appealShall be filed in respect of an assessment year or 6/13 years in which the tax effect is less than themonetary limit specified in para 3. In other words,henceforth, appeals can be filed only withreference to the tax effect in the _ relevanassessmentYyedr.However,inCASECofacomposite order of any High Court or appellateauthority,whichinvolvesMorethanOTULassessment year and common issues in morethan one assessment year, appeals shall be filedin respect of all such assessment years even ifthe tax effect is less than the prescribed monetarylimits in any of the year(s), uf it is decided to fileappeal in respect of the year(s) in which tax effectexceeds the monetary limit prescribed. In casewhere a composite order/ Judgment involves morethan one assessee, each assessee Shall be dealt’with separately. 6. Further, where income is computed|under the provisions of section 115JB or sectionL1IS5JC, for the purposes of determination of ‘taeffect’, tax on the total income assessed shall becomputed as per the following formula- (A - B)+(C - D) where, A = the total income assessed as per theprovisions other than the provisions contained in Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 7/13 section 115JB or section 115JC (herein calledgeneral provisions); B = the total income that would have beenchargeable had the total income assessed as perthe general provisions been reduced by theamount of the disputed issues under generalProvisions;| C = the total income assessed as per theprovisions contained in section 115JB or section115JC; D = the total tncome that would have beenchargeable had the total income assessed as perthe provisions contained in section 115JB orsection 1]15JCwas reduced by the amount ofdisputed issues under the said provisions: However, where the amount of disputed issues isconsidered both under the provisions contained insection 1J115JB or section 115JC and undegeneral provisions, such amount shall not bereduced from total income assessedwhile|determining the amount under item D. 7. In a case where appeal before aTribunal or a Court is not filed only onaccount of the tax effect being less than the| C = the total income assessed as per theprovisions contained in section 115JB or section115JC; D = the total tncome that would have beenchargeable had the total income assessed as perthe provisions contained in section 115JB orsection 1]15JCwas reduced by the amount ofdisputed issues under the said provisions: However, where the amount of disputed issues isconsidered both under the provisions contained insection 1J115JB or section 115JC and undegeneral provisions, such amount shall not bereduced from total income assessedwhile|determining the amount under item D. 7. In a case where appeal before aTribunal or a Court is not filed only onaccount of the tax effect being less than the| Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 8/13 monetary limit spectfied above, the Pr.Commisstoner of Income-tax/ Commissionerof Income Tax shall spectfically record that|“even though the decision is not acceptable,|appeal is not being filed only on theconsideration that the tax effect ts less than|themonetarylimtt|specifiedinthisCircular”. Further, in such cases, there will|be no presumption that the Income-tax|Department has acquiesced in the decision|OT.thedisputedissues.TheIncome-taxDepartment shall not be precluded from filing anappeal against the disputed issues in the case ofthe same assessee for any other assessmentyear, or in the case of any other assessee for thesame or any other assessment year, if the taxeffect exceeds the specified monetary limits. 8. In the past, a number of instances havecome to the notice of the Board, whereby anassessee has claimed relieffrom the Tribunal orthe Court only on the ground that the Departmenthas implicitly accepted the decision of theTribunal or Court in the case of the assessee forany other assessment year or in the case of anyother assessee for the same or any _ otheassessment year, by not filing an appeal on the Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 9/13 Samedisputedissues.TheDepartmentalrepresentatives/counsels must make every effortto bring to the notice of the Tribunal or the Courtthat the appeal in such cases was not filed or notadmitted only for the reason of the tax effectbeing less than the specified monetary limit and,therefore, no inference should be drawn that thedecisions rendered therein were acceptable to theDepartment. Accordingly, they should impressupon the Tribunal or the Court that such cases donot have any precedent value and also bring tothe notice of the Tribunal/ Court the provisions ofsub section (4) of section 268A of the Income-taxAct, 1961 which read as under : “(4) The Appellate Tribunal or Court, hearing suchappeal or reference, shall have regard to theorders, instructions or directions issued undersub-section (1) and the circumstances underwhich such appeal or application for referencewas filed or notfiled in respect of any case.” | 9. As the evidence of not filing appeal dueto this Circular may have to be produced incourts, the judicial folders in the office of Pr.CsIT/CsIT must be maintained in a systemic mannerfor easy retrieval. Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 10/13 10. Adverse judgments relating to thefollowing issues should becontested on meritsnotwithstanding that the tax effect entailed isless than the monetary limits specified in para 3above or there is no tax effect: (a) Where the Constitutional validity of theprovisions of an Act or Rule is under challenge, or| (b) Where Board’s order, Notification, Instructionor Circular has been held to be illegal or ultravires, OF (c) Where Revenue Audit objection in the case hasbeen accepted by the Department, or (ad) Where the addition relates to undisclosedforeign assets/ bank accounts. Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 10/13 10. Adverse judgments relating to thefollowing issues should becontested on meritsnotwithstanding that the tax effect entailed isless than the monetary limits specified in para 3above or there is no tax effect: (a) Where the Constitutional validity of theprovisions of an Act or Rule is under challenge, or| (b) Where Board’s order, Notification, Instructionor Circular has been held to be illegal or ultravires, OF (c) Where Revenue Audit objection in the case hasbeen accepted by the Department, or (ad) Where the addition relates to undisclosedforeign assets/ bank accounts. 11. The monetary limits specified in para 3above shall not apply to writ matters and Directtax matters other than Income tax. Filing ofappeals in other Direct tax matters shall continueto be governed by relevant provisions of statuteand rules. Further, in cases where the tax effectis not quantifiable or not involved, such as thecase of registration of trusts or institutions undersection 12A/ I2AA of the IT Act, 1961 etc., filingof appeal shall not be governed by the limits 11/13 Specified in para 3 above and decision to fileappeals in such cases may be takenon meritsofa particular case. 12. It is clarified that the monetary limit of)Rs. 20 lakhs for filing appeals before the ITATwould apply equally to cross objections undersection 253(4) of the Act. Cross objections belowthis monetary limit, already filed, should bepursuedfordismissal as|withdrawn|NOT|pressed. Filing of cross objections below themonetary limit may not be considered henceforth.similarly, references to High Courts and SLPs/appealsbeforesupremeCourtbelowthe.monetary limit of Rs. 50 lakhs and Rs. 1 Crorerespectively should be pursued for dismissal aswithdrawn/ not pressed. References before HighCourt and SLPs/ appeals below these limits maynot be considered henceforth. 13.ThisCircularwillapplytoOLPs/appeals/cross objections/references to befiled henceforth in SC/HCs/Tribunal and it shallalso apply retrospectively to pending SLPs/appeals/ cross objections/references.|Pendingappeals below the specified tax limits in|para 3 above may be withdrawn/ notpressed.” 12/13 14.The above may be brought to the noticeof all concerned. 15. This issue under Section 268A of the Income-tax Act 1961. 16. Hindi version will follow. od/- (11/07/2018)(Neetika Bansal)Director (ITJ),CBDT, New Delht 2 |The tax effect in the present case as stated|by the Appellants-Revenue is less than the prescribedlimit otRs.50.00 lakhsfor filing an appeal before HighCourt. 3.|Learnedcounselforthe Appellants-Revenue does not press this appeal and seeks leave ofthe Court to withdraw the present appeal in terms ofparagraph-13_ot the said Circular. a |Accordingly, in view of the aforesaid Circular.issued by the Central Board of Direct Taxes, the present Date of Order 20-07-2018 I.T.A.No.151/2010 The Commissioner of Income-Tax & Anr. Vs. M/s. United Breweries (Holdings)Ltd., 13/13 appeal is disposed of as withdrawn without answering the purported substantial questions of law. PL” Sd/-.JUDGE| Sd/-|JUDGE|