Commissioner Of Income Tax, Jaipur v. M/S. Udaipur Mineral Development Syndicate P. Ltd

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR 1. D.B. Income Tax Reference No.7/1997 Commissioner of Income Tax, Jaipur Vs. M/s. Udaipur Mineral Development Syndicate P. Ltd. 2. D.B. Income Tax Reference No.16/1997 Commissioner of Income Tax, Jaipur Vs. M/s. Golecha Properties P. Ltd. Date of order : 02.02.2016 Hon'ble Mr. Justice Ajay RastogiHon'ble Mr. Justice J.K. Ranka Mr. Anuroop Singhi Adv., for applicants Mr. Anant Kasliwal Adv., for respondent in (16/1997). By the Court 1.These two references u/sec. 256(2) & 256(1) of the Income Tax Act, 1961, at the instance of Revenue seeks our opinion on the following questions of law :- D.B. ITR No.7/1997 “1.Whether on the facts and in the circumstances ofthe case the Tribunal was justified in upholding theorder of the AAC deleting the disallowance of interestof Rs.97,691/- made u/s.36(1) (iii) of the I.T. Act,1961?” D.B. ITR No.16/1997 “1.Whether, on the facts and in the circumstances ofthe case, the Income-tax Appellate Tribunal was right inholding that the expenditure claimed at Rs.3,90,595/-was allowable as revenue expenditure?” 2.It is brought to our notice that a Circular has been issued bythe Central Board of Direct Taxes dated 10.12.2015 bearingNo.21/2015 in exercise of powers u/sec. 268A(1) of the Income-Tax Act laying down revision of monetary limits for filing ofappeals by the Department before the Tribunal and High Courtsand SLP before Supreme Court keeping in view the measures forreducing litigation. The relevant paras 3, 8, 9 and 10 of theCircular are quoted hereunder :- “3.Henceforth, appeals/SLPs shall not be filed in caseswhere the tax effect does not exceed the monetary limits givenhereunder :- S.Appeals in Income-tax mattersMonetary Limit (inNo.Rs.)1Before Appellate Tribunal10,00,000/-2Before High Court20,00,000/-3Before Supreme Court25,00,000/- It is clarified that an appeal should not be filed merely becausethe tax effect in a case exceeds the monetary limits prescribedabove. Filing of appeal in such cases is to be decided on meritsof the case. 4.xxxxxxxxx5.xxxxxxxxx6.xxxxxxxxx7.xxxxxxxxx 8.Adverse judgments relating to the following issuesshould be contested on merits notwithstanding that the taxeffect entailed is less than the monetary limits specified in para3 above or there is no tax effect: (a) Where the Constitutional validity of the provisions ofan Act or Rule are under challenge, or (b)Where Board's order, Notification, Instruction orCircular has been held to be illegal or ultra vires, or (c)Where Revenue Audit objection in the case hasbeen accepted by the Department, or (d)Where the addition relates to undisclosed foreignassets/bank accounts. 9.The monetary limits specified in para 3 above shall notapply to writ matters and direct tax matters other than Incometax. Filing of appeals in other Direct tax matters shall continueto be governed by relevant provisions of statute & rules.Further, filing of appeal in cases of Income Tax, where the taxeffect is not quantifiable or not involved, such as the case ofregistration of trusts or institutions under section 12 A of the ITAct, 1961, shall not be governed by the limits specified in para3 above and decision to file appeal in such cases may be takenon merits of a particular case. 10.This instruction will apply retrospectively to pendingappeals and appeals to be filed henceforth in HighCourts/Tribunals. Pending appeals below the specified taxlimits in para 3 above may be withdrawn/not pressed. Appealsbefore the Supreme Court will be governed by the instructionson this subject, operative at the time when such appeal wasfiled.” 3.And laying down other conditions as well which has to beconsidered by the Assessing Officer or Appellate Authority aswell, the CBDT in paras 9 and 10 of the Circular it has beenobserved that the monetary limits specified in para 3 above shall 10.This instruction will apply retrospectively to pendingappeals and appeals to be filed henceforth in HighCourts/Tribunals. Pending appeals below the specified taxlimits in para 3 above may be withdrawn/not pressed. Appealsbefore the Supreme Court will be governed by the instructionson this subject, operative at the time when such appeal wasfiled.” 3.And laying down other conditions as well which has to beconsidered by the Assessing Officer or Appellate Authority aswell, the CBDT in paras 9 and 10 of the Circular it has beenobserved that the monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than incometax, and at the same time these instructions will applyretrospectively to the pending appeals and appeals to be filedhenceforth in High Courts/Tribunals, and also before the Supreme Court. The Circular in para 8 carves out four exceptions asreferred to hereinabove. 4.However, instant are cases of references u/sec. 256(2) & 256(1) of the Income Tax Act, as it then was, and plea raised is that theaforesaid Circular may not be applicable as it relates only toappeals. 5.In our view, taking into consideration the judgment renderedby the Bombay High Court in the case of CIT v. M/s. SunnySounds P. Ltd. Mumbai Income Tax Reference No.213/1997, dated8.1.2016, where this issue came up for consideration and it washeld that there is no reason why the Circular should not apply topending references where the tax effect is less than Rs.20 lac andobject of the Circular to reduce litigation would be frustrated andbe applicable even to pending references. We also concur with theview expressed by the Bombay High Court (supra). 6.In view of the above, we hold that as admittedly the tax effectis less than Rs.20 lac in the instant references at the instance ofRevenue, the same are returned unanswered. However, we make itclear that the question of law as raised for our opinion, is left opento be considered in an appropriate case. In case the instant appealfalls in any of the exceptions as referred to in the Circular, the Revenue will be at liberty to move an application for recalling ofthe order. 7.The references are disposed of accordingly. No order as to costs. (J.K. Ranka) J. (Ajay Rastogi) J. S.Kumawat-1-2 Certificate- All corrections made in the judgment/order have been incorporated in thejudgment/order being e-mailed. S.Kumawat Jr. P.A