Date Of Order:25.07.2018. I.t.a v. M/S. Societe Generale Global Solutions Centre Pvt. Ltd

1/13. IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25[th]DAY OF JULY, 2018 PRESENT THE HON BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs. JUSTICE S. SUJATHA I.T.A. No.593/2017 BETWEEN: 1.|Pr. COMMISSIONER OF INCOME TAX - VI, BMTC COMPLEX, KORAMANGALA, BANGALORE - 560 095. 2 |THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(2), BANGALORE. .. APPELLANTS| (BY SRI SANMATHI E.I., ADVOCATE) AND: M/s. SOCIETE GENERALEGLOBAL SOLUTIONS CENTRE PVT. LTD.,|19 FLOOR,VOYAGER BUILDING,ASCENDAS ITPB SEZ, WHITEFIELD, ITPL,|BANGALORE 560 066.PAN: AAECS6 /64L . RESPONDENT| THIS I.T.A. IS FILED UNDER SECTION 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED 15.03.2017|PASSED IN MP No.150/Bang/2016 IN ITA No.1245/Bang/2010,|FOR THE ASSESSMENT YEAR-2006-07, PRAYING THIS HON'BLE|COURT 70: DECIDE THE FOREGOING QUESTION OF LAW,AND/OR SUCH OTHER QUESTION OF LAW AS MAY BE| Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 2/13| FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET|ASIDE THE APPELLATE ORDER DATED 15.03.2017 PASSED BYTHE|INCOME.TAXAPPELLATETRIBUNAL,|‘B’|BENCH,|BANGALORE,TN|MPNo.150/Bang/2016|IN|TTA!No.1245/Bang/2010 FOR ASSESSMENT YEAR 2006-07 AS|SOUGHT FOR IN THIS APPEAL AND ETC.| THIS I.7T.A. COMING ON FOR ADMISSION THIS DAY, |Dr. VINEET KOTHARI. J.,MADE THE FOLLOWING: ORDER MirSanmatni E.I.!, Adv. for Appellants-Revenue. 1.Learned counsel for the Appellants-Revenue hasbrought to the notice of this Court that the Central Boardof Direct Taxes, Department of Revenue, Ministry ofFinance, Government of India, New Delhi, has recentlyissued a revised.Circular No.3/2018, dated 11[th]July,2018,revising the monetary limits for filing appeals by theDepartment before the Income Tax Appellate Tribunal,Hign Courts 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; Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 3/13) “Circular No. 3/2018 F No. 279/Misc. 142/2007-ITJ (Pt)Government of IndiaMinistry of Finance’Department of RevenueCentral Board Direct Taxes| New Delni the 1][th]July, 2018 Subject: Revision of monetary limits forfiiing of appeals py the Departmentbefore Income Tax Appellate Tribunal,High Courts and SLPs/ appeals beforeSupreme Court-measures for reducinglitigation-Reg. Reference is invited to Board’s Circular No.71 of 2015 dated 10.12.2015 wnerein monetary limits|and other conditions for filing departmental appeals(in.[ncome-tax|matters)|before[IncomelaxAppellate Tribunal, High Courts and SLPs/ appeadlibefore Supreme Court were specified. ,, In|SupersessIionof the above Circular, it Nas|been aecided by the Board that departmental|appeals may De filed on merits before Income Tax|Appellate Tribunal and High Courts and SLPs/| Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 4/13| appeals before Supreme Court keeping in view tne|monetary limits and conaitions specified below. 3. Henceforth, appeals/ SLPs shall not be filed incases where the tax effect does not exceed the|monetary limits given hereunder: It is clarified that an appeal should not be filed|merely because the tax effect in a case exceeds themonetary limits prescribed above. Filing of appeal|in such cases is to be Gde@eCcIon meritsof theCda/Se ,, In|SupersessIionof the above Circular, it Nas|been aecided by the Board that departmental|appeals may De filed on merits before Income Tax|Appellate Tribunal and High Courts and SLPs/| Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 4/13| appeals before Supreme Court keeping in view tne|monetary limits and conaitions specified below. 3. Henceforth, appeals/ SLPs shall not be filed incases where the tax effect does not exceed the|monetary limits given hereunder: It is clarified that an appeal should not be filed|merely because the tax effect in a case exceeds themonetary limits prescribed above. Filing of appeal|in such cases is to be Gde@eCcIon meritsof theCda/Se 4. For this purpose, ‘tax effect’ means the)difference Detween 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 its intended to be filed(hereinafter referred to as ‘disputed issues’).|Further, ‘tax effect’ shall be tax including|applicable surcnarge and cess.However, the. Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 5/13| 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 thetax effect. In cases where returned loss is reduced|or assessed as income, the tax effect would includenotional tax on disputed additions. In case of|penalty orders, the tax effect will mean quantum ofpenalty deleted or reduced in tne order to be|appealed against. 5. The Assessing Officer shall calculate the tax|effect separately for every assessment year in|respect of the disputed issues in tne case of every|assessee. If, in the case of an assessee, the|disputed issues arise|in morethan one assessment.year, appeal can be filed in respect of such|assessment year or years in whicn tne tax effect inrespect of the disputed issues exceeds the|monetary limit specified in para 3. No appeal snail|be filed in respect of an assessment year or years|in wnhicn the tax effect is less tnan the monetarylimitspecified InPala3.[n}otnerwords,henceforth, appeals can be filed only with referenceto the tax effect in the relevant assessment year.However, in case of a composite order of any High Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 6/13| Court or appellate authority, whicn involves more|than one assessment year and common issues in|more than one assessment year, appeals shall be|filed in respect of all such assessment years even Ifthe tax effect is less than the prescribed monetary|limits in any 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|wnere a composite order/ Judgement involves morethan one assessee, each assessee Shall be dealtwith separately.| 6. Further, wnere income is computed unaer the|provisions of section 115JB or section 115JC, for|the purposes of determination of ‘tax effect’, tax onthe total income assessed snali be computed as per|the following formula-_ (A - B)+(C- D)| wnere, A = the total income assessed as per the provisionsother tnan tne provisions contained in section|115JB or section 115JC (nerein calieaq generalprovisions); Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 7/13| B = the total [Income that would Nave beenchargeable nad the total income assessed as per|the general provisions been reduced by the amount|of the disputed issues under general provisions; 6. Further, wnere income is computed unaer the|provisions of section 115JB or section 115JC, for|the purposes of determination of ‘tax effect’, tax onthe total income assessed snali be computed as per|the following formula-_ (A - B)+(C- D)| wnere, A = the total income assessed as per the provisionsother tnan tne provisions contained in section|115JB or section 115JC (nerein calieaq generalprovisions); Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 7/13| B = the total [Income that would Nave beenchargeable nad the total income assessed as per|the general provisions been reduced by the amount|of the disputed issues under general provisions; C = tne total income assessed as per the provisionscontained in section 115JB or section 115JC; D = the total Income that would have been|chargeable nad the total income assessed as per|the provisions contained in section 115JB or section1I5JC was reduced by the amount of disputed|issues under the said provisions: However, where the amount of disputed issues Is considered both unaer tne provisions contained insection 115JB or section 115JC and under general|provisions, such amount shall not be reduced fromtotal income assessed while determining thneamount under item D. 7. In a case where appeal before a Tribunal ora Court is not filed only on account of the taxeffect being less than the monetary I[imitspecified above, the Pr. Commissioner ofIncome-tax/ Commissioner of Income Taxshall specifically record that “even though the Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 8/13| decision is not acceptabie, appeal is not beingfiled only on the consideration that the taxeffect is less than the monetary limit specifiedin this Circular”. Further, in such cases, therewill be no presumption that the Income-taxDepartment has acquiesced in the decision onthe disputed issues.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 any other assessee for the same or any|other assessment year, if the tax effect exceeds|the specified monetary limits. 8. In the past, a number of instances have come tothe notice of the Board, whereby an assessee has|claimed relief from the Tribunal or the Court only|on the ground that the Department has implicitly|accepted the decision of the Tribunal or Court in|the case 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 filing|an appeal on the same disputed issues. The|Departmental representatives/counsels must make|every effort to bring to the notice of the Tribunal or the Court that the appeal in sucn cases was not| Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 9/13| filea or not admitted only for the reason of tne tax|effect being less than the specified monetary limit|and, therefore, no inference should be drawn that|the decisions rendered therein were acceptable to the Department. Accordingly, they should impress|upon tne Tribunal or the Court that sucn cases do|not nave any precedent value and also bring to thenotice of the Tribunal/ Court the provisions of sub|section (4) of section 268A of the Income-tax Act,1961 whicn read as Under : “(4) The Appellate Tribunal or Court, nearing sucn|appeal or reference, shall have regard to the|orders, instructions or directions issued under subDsection (1) and the circumstances under which|sucn appeal or application for reference was filed or not filed in respect of any case.” 9/13| filea or not admitted only for the reason of tne tax|effect being less than the specified monetary limit|and, therefore, no inference should be drawn that|the decisions rendered therein were acceptable to the Department. Accordingly, they should impress|upon tne Tribunal or the Court that sucn cases do|not nave any precedent value and also bring to thenotice of the Tribunal/ Court the provisions of sub|section (4) of section 268A of the Income-tax Act,1961 whicn read as Under : “(4) The Appellate Tribunal or Court, nearing sucn|appeal or reference, shall have regard to the|orders, instructions or directions issued under subDsection (1) and the circumstances under which|sucn appeal or application for reference was filed or not filed in respect of any case.” 9. As the evidence of not filing appeal due to this|Circular may have to be produced in courts, the|judicial folders in the office of Pr.CsIT/ CsIT must|be maintained in a systemic manner for easy|retrieval. 10. Adverse judgments relating to the following|ISSUES|Snouiabe|contestedOrimerits|notwithstanding that the tax effect entailed ts less| Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotner VS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 10/13. than the monetary limits specified in para 3 above|or there Is no tax effect: (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 Nas been neld to be iilegal or ultra vires,OTr (c) Wnere Revenue Audit objection in the case nas|been accepted by the Department, or (d) Where the aadition relates to Uundisclosedforeign assets/ bank accounts. 11. The monetary limits specified in para 3 above|Shall not apply to writ matters and Direct tax|matters other than Income tax. Filing of appeals inother Direct tax meatters shall continue to begoverned by relevant provisions of statute and|rules. Further, in cases where the tax effect Is not|guantifiable or not involved, such as the case of|registration of trusts or institutions under section|12A/ 12AA of the IT Act, 1961 etc., filing of appealShall not be governed by the limits specified in para Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 11/13 3 above and aecision to file appeals in sucn Cases|may be taken|on meritsof a particular Case. 12. It is clarified that the monetary limit of Rs. 20lakhs for filng appeals before the ITAT would applyegually to cross objections under section 253(4) ofthe Act. Cross objections below this monetary limit,already filed, should be pursued for dismissal as|witnarawn/ not pressed. Filing of cross objections|below the monetary limit may not be considerednencefortn. Similarly, references to High Courts|and SLPs/ appeals before Supreme Court below themonetary limit of Rs. 50 lakhs and Rs. 1 Crore|respectively snould be pursued for dismissal as|withdrawn/ not pressed. References before High|Court and SLPs/ appeals below these limits may|not be considered nenceforth. 13. This Circular will apply to SLPs/appeals/cross|objections/references to be filed nencefortnh inSC/HCs/Tribunaland|ItShall]also|applyretrospectively to pending SLPs/ appeals/ cross|objections/references. Pending appeals Delowtne specified tax limits in para 3 above maybe witndrawn/ not pressed. Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 12/13 14. Tne above may be brought to the notice of ail|concerneg. 15. This issue under Section JZJ68A of the [ncomtax Act 1961. 16. Hindi version will follow. Sd/- |(11/07/2018) (Neetika Bansal) Director (ITJ),CBDT, New Delni,(L 2.Tne tax effect in the present case as stated by the|Appellants-Revenue is less than the prescribed limit ofRs.50.00 lakhsfor filling an appeal before High Court. Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 12/13 14. Tne above may be brought to the notice of ail|concerneg. 15. This issue under Section JZJ68A of the [ncomtax Act 1961. 16. Hindi version will follow. Sd/- |(11/07/2018) (Neetika Bansal) Director (ITJ),CBDT, New Delni,(L 2.Tne tax effect in the present case as stated by the|Appellants-Revenue is less than the prescribed limit ofRs.50.00 lakhsfor filling an appeal before High Court. ‘3.Learned counsel for the Appellants-Revenue does notpress this appeal and seeks leave of the Court to withdrawthe present appeal in termsof |paragrapn - 13of the said.Circular. Date of order:25.07.2018. I.T.A. No.593/2017Pr. Commissioner of Income Tax-VI and anotnerVS. M/s. Societe Generale Global Solutions Centre Pvt. Ltd., 13/13 4Accordingly, in view of the aforesaid Circular issued by the Central Board of Direct Taxes, the present appeal is disposed of as withdrawn without answering the purportedsubstantial questions of law.. Copy of this order be sent to the respondent-Assessee, forthwith. MV Sd/-.JUDGE| Sd/-.JUDGE|