Date Of Order 26-07-2018 I.t.a v. M/S. Tanglin Retail Reality Developments Private Limited

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 26 DAY OF JULY 2018 PRESENT THE HON'BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA I.T.A.No.1045/2017 BETWEEN: Ll.Pr. Commissioner of Income Tax-VII, Koramangala, BMTC Building, Bengaluru. iaDeputy Commissioner of Income Tax, Circle-95(1)(1), BMTC Building, 80 Feet Road, Koramangala, Bengaluru. .. Appellants (By Sri. E.I. Sanmathi, Advocate) — AND: M/s. Tanglin Retail RealityDevelopments Private Limited,No.23/1,9[ -]Floor,Cotteeday Square,Vittal Mallya Road,Bengaluru-s60001. PAN. AADCTOO023G. ...Respondent This I.T.A. is filed under Section J60-A of Income TaxAct, 1961, praying to decide the foregoing question of law|and/or such other questions of law as may be formulated by Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 2/11 the Hon’ble Court as deemed fit and set aside the appellateorder dated:31.03.2017 passed by the Income Tax AppellateTribunal, ‘C’ Bench, Bengaluru, in appeal proceedingsNo.ITA No.265/Bang/2016 tor Assessment Year 2012-13, assought for in this appeal. ThisTA.comingON)for.Ordersthis|S.Sujatha J.,made the following:- day, | ORDER Mr.E.I.Sanmathi,Adv. for Appellants-_Revenue| Ll.HOT|the|TEASOQOTstatedinthe Afttidavit accompanying 1.A.1/2018, delay in filing the appeal iscondoned. I1.A.1/2018 is allowed accordingly. 2. Learned counsel for the Appellants-Revenue has|brought to the notice of this Court that the Central Board ofDirect Taxes, Department of Revenue, Ministry of Finance,Government of India, New Delhi, has recently issued arevisedCircular No.3/2018, dated 11[th]July, 2018,revising the monetary limits for filing appeals by theDepartment before the Income Tax Appellate Tribunal, HighCourts and Supreme Court and the earlier monetary limits for the High Courts is upwardly revised from|Rs.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 (PtGovernment of IndiaMinistry of FinanceDepartment ofRevenueCentral Board Direct Taxes New Delhi the 1][th]July, 2018| Subject:- Revtsion of monetary ltmits forfiling of appeals by the Department beforeIncome Tax Appellate Tribunal, High Courts andSLPs/ appeals before Supreme Court-measuresfor reducing litigation-Reg. Reference is invited to Board’s Circular No.21of 2015 dated 10.12.2015 wherein monetary limits|and other conditions for filing departmental appeals(in Income-tax matters) before Income Tax Appellate|Tribunal, High Courts and SLPs/ appeals before|Supreme Court were specified. 2. In|Supersession of the above Circular, it has’been decided by the Board that departmental appeals|may be filed on merits before Income TaxAppellateTribunal and High Courts and SLPs/ appeals before|Supreme Court keeping in view the monetary limits|and conditions specified below. Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 4/11 3. Henceforth, appeals/ SLPs shall not be filedin cases where the tax effect does not exceed themonetary limits given hereunder: 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 mertts|of the case. 2. In|Supersession of the above Circular, it has’been decided by the Board that departmental appeals|may be filed on merits before Income TaxAppellateTribunal and High Courts and SLPs/ appeals before|Supreme Court keeping in view the monetary limits|and conditions specified below. Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 4/11 3. Henceforth, appeals/ SLPs shall not be filedin cases where the tax effect does not exceed themonetary limits given hereunder: 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 mertts|of the case. 4. For this purpose, ‘tax effect’ means thedifference between the tax on the total income)assessed and the tax that would have beenchargeable had such total income been reduced by theamount 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 andcess,However, the tax will not include any interest|thereon, except where chargeability of interest itself is|in dispute. In case the chargeability 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 includenotional tax on disputed additions. In case ofpenalty|orders, the tax effect will mean quantum of penalty| 5/11 deleted or reduced in the order to be appealedagainst. o. The Assessing Officer shall calculate the taxeffect separately for every assessment year in respectof the disputed issues in the case of every assessee.|If, in the case of an assessee, the disputed issuesarisein morethan one assessment year, appeal can)be filed in respect of such assessment year or years in|which the tax effect in respect of the disputed issues|exceeds the monetary limit specified in para 3. Noappeal shall be filed in respect of an assessment yearor years in which the tax effect is less than themonetary limit specified in para 3. In other words,|henceforth, appeals can be filed only with reference to|the tax effect in the relevant assessment year.|However, in case of a composite order of any High)Court or appellate authority, which involves more thanone assessment year and common issues in more)than one assessment year, appeals shall be filed in|respect of all such assessment years even tif the taxeffect is less than the prescribed monetary limits inany of the year(s), if it is decided to file appeal in|respect of the year(s) in which tax effect exceeds the|monetary limit prescribed. In case where a composite|order/ judgment involves more than one assessee,|each assessee shall be dealt with separately. 6. Further, where income is computed underthe provisions of section 115JB or section 115JC, for) Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. the purposes of determination of ‘tax effect’, tax on the|total income assessed shall be computed as per thefollowing formula- (A - B)+(C - D) where,| A = the total income assessed as per the provisionsother than the provisions contained in section 115JBor section 115JC (herein called general provisions); B = the total income that would have been chargeablehad the total income assessed as per the general|provisions been reduced by the amount of thedisputed issues under general provisions; C = the total income assessed as per the provisions|contained in section 115JB or section 115JC; D = the total income that would have been chargeablehad the total income assessed as per the provisions|contained in section 115JB or section J]15JCwasreduced by the amount of disputed issues under the|Said provisions: the purposes of determination of ‘tax effect’, tax on the|total income assessed shall be computed as per thefollowing formula- (A - B)+(C - D) where,| A = the total income assessed as per the provisionsother than the provisions contained in section 115JBor section 115JC (herein called general provisions); B = the total income that would have been chargeablehad the total income assessed as per the general|provisions been reduced by the amount of thedisputed issues under general provisions; C = the total income assessed as per the provisions|contained in section 115JB or section 115JC; D = the total income that would have been chargeablehad the total income assessed as per the provisions|contained in section 115JB or section J]15JCwasreduced by the amount of disputed issues under the|Said provisions: However, where the amount of disputed issues 1s)considered both under the provisions contained insection 115JB or section 115JC and under generalprovisions, such amount shall not be reduced fromtotal income assessed while determining the amountunder item D. Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 7/11 7. In a case where appeal before aTribunal or a Court ts not filed only on accountof the tax effect being less than the monetarylimit specified above, the Pr. Commissioner ofIncome-tax/ Commissioner of Income Tax shallspectficallyrecordthat“eventhough|thedecision ts not acceptable, appeal is not beingfiled only on the consideration that the taxeffect ts less than the monetary limtt specified inthis Circular”. Further, in such cases, there willbe.TLOpresumptionthat|the.Income-taxDepartment has acquiesced in the dectsion onthe disputed tissues.The Income-tax DepartmentShall not be precluded from filing an appeal against)the disputed issues in the case of the same assessee|for any other assessment year, or in the case of anyother assessee for the same or any other assessmentyear, if the tax effect exceeds the specified monetary|limtits. &. In the past, a number of instances havecome to the notice of the Board, whereby an assesseehas claimed relieffrom the Tribunal or the Court only|on the ground that the Department has implicitlyaccepted the decision of the Tribunal or Court in thecase of the assessee for any other assessment year or)in the case of any other assessee for the same or any|other assessment year, by not filling an appeal on theSQITtdisputedissues.TheDepartmental Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 8/11 representatives/counsels must make every effort to|bring to the notice of the Tribunal or the Court that the|appeal in such cases was not filed or not admittedonly for the reason of the tax effect being less than the|specified monetary limit and, therefore, no inferenceShould be drawn that the decisions rendered therein|were acceptable to the Department. Accordingly, they|Should impress upon the Tribunal or the Court thatsuch cases do not have any precedent value and alsobring to the notice of the Trbunal/ Court the|provisions of sub section (4) of section 268A of the)Income-tax Act, 1961 which read as under : “(4) The Appellate Tribunal or Court, hearing suchappeal or reference, shall have regard to the orders,instructions or directions issued under sub-section (1) and the circumstances under which such appeal orapplication for reference was filed or not filed inrespect of any case.” 9. As the evidence of not filing appeal due tothis Circular may have to be produced in courts, the|judicial folders in the office of Pr.CsIT/ CsIT must bemaintained in a systemic mannerfor easy retrieval. 10. Adverse judgments relating to the followingLSSUESShould.be|contestedormmeritsnotwithstanding that the tax effect entailed is lessthan the monetary limits specified in para 3 above or|there is no tax effect: “(4) The Appellate Tribunal or Court, hearing suchappeal or reference, shall have regard to the orders,instructions or directions issued under sub-section (1) and the circumstances under which such appeal orapplication for reference was filed or not filed inrespect of any case.” 9. As the evidence of not filing appeal due tothis Circular may have to be produced in courts, the|judicial folders in the office of Pr.CsIT/ CsIT must bemaintained in a systemic mannerfor easy retrieval. 10. Adverse judgments relating to the followingLSSUESShould.be|contestedormmeritsnotwithstanding that the tax effect entailed is lessthan the monetary limits specified in para 3 above or|there is no tax effect: Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 9/11 (a) Where the Constitutional validity of the provisions|of an Act or Rule is 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, or| (d) Where the addition relates to undisclosed foreign|assets/ bank accounts. 11. The monetary limits specified in para 3above shall not apply to writ matters and Direct taxmatters other than Income tax. Filing of appeals in|other Direct tax matters shall continue to be governed|by relevant provisions of statute and rules. Further, in|cases where the tax effect is not quantifiable or notinvolved, such as the case of registration of trusts or|institutions under section 12A/ 12AA of the IT Act,|1961 etc., filing of appeal shall not be governed by thelimits specified in para 3 above and decision to file|appeals in such cases may be taken|on mertts|ofaparticular case. 12. It ts clarified that the monetary limit of Rs.20 lakhs for filing appeals before the ITAT wouldapply equally to cross objections under section 253(4)|of the Act. Cross objections below this monetary limit,already filed, should be pursued for dismissal aswithdrawn/ not pressed. Filing of cross objections| Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 10/11 below the monetary limit may not be considered|henceforth. Similarly, references to High Courts and|SLPs/ appeals before Supreme Court below themonetary limit of Rs. SO lakhs and Rs. 1 Crore|respectively should be pursued for dismissal as)withdrawn/ not pressed. References before High)Court and SLPs/ appeals below these limits may not|be considered hencefortn.| 13.|ThisCircularwilapply|To|SLPs/appeals/cross objections/references to be filedhenceforth in SC/HCs/Tribunal and it shall also|apply retrospectiwely to pending SLPs/ appeals/ cross|objections/ references.Pending appeals below thespectfied tax limits in para 3 above may bewithdrawn/ not pressed.” 14.The above may be brought to the notice ofall concerned. 15. This issue under Section 268A of theIncome-tax Act 1961. 16. Hindi version wil follow. | Sd/-_ (11/07/2018)|(Neetika Bansal)Director (ITJ),CBDT, New Delht. Date of Order 26-07-2018 I.T.A.No.1045/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tanglin Retail Reality Developments Private Limited. 3.The tax effect in the present case as stated by the Appellants-Revenue is less than the prescribed limit of Rs.50.00 lakhsfor filing an appeal betore High Court. 4 |Learnedcounselfor.the|Appellants- Revenue does not press this appeal and seeks leave of theCourt to withdraw the present appeal in terms off paragraph-13ot the said Circular. 5Accordingly, in view of the aforesaid Circular| issued by the Central Board of Direct Taxes, the presentappeal is disposed of as withdrawn without answering thepurported substantial questions of law. Copy of this order be sent to the Respondent-Assesseeforthwith. Sd/-.JUDGE| Sd/-.JUDGE| List No.3, SI.No.1.