Ita/214/2018 Of The Commissioner Of Income -Tax Tds v. M/S Central Power Research Institute

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.214/2018 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX, TDS, No.59, HMT BHAVAN, FLOOR, BALLARI ROAD, GANGANAGAR,|BENGALURU —- 560 O32.BENGALURU —- 560 O32. 2 |THE INCOME TAX OFFICER,TDS, WARD - 1(2),.NO.59, HMT BHAVAN,— FLOOR, BALLARI ROAD,TDS, WARD - 1(2),.NO.59, HMT BHAVAN,— FLOOR, BALLARI ROAD, GANGANAGAR, BENGALURU - 560 0327BENGALURU - 560 0327 ..APPELLANTS| (BY SRI ARAVIND K.V., ADVOCATE). AND: M/s. CENTRAL POWER RESEARCH INSTITUTE, SIR C.V.RAMAN ROAD, SADASHIVNAGAR,BENGALURU —- 560 O80.PAN: AAAAC O0O26.. RESPONDENT| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS, M/s. Central Power Research Institute 2/13| THIS I.T.A. IS FILED UNDER SECTION 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED 13.10.2017,|PASSED IN ITA No.1766/Bang/2017 FOR THE ASSESSMENT.YEAR|2013-2014,PRAYINGTO!(i)FORMULATETHESUBSTANTIAL.QUESTIONSOFLAW|STATED(ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSEDBY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA]No.1/66/Bang/2017 DATED 13.10.2017 AND CONFIRM THE|ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE|ORDER PASSED BY THE INCOME TAX OFFICER, TDS, WARD - 1(2), BENGALURU AND ETC. ABOVE; | THIS I.7T.A. COMING ON FOR ADMISSION THIS DAY,Dr. VINEET KOTHARI. J.,MADE THE FOLLOWING: ORDER MirAravind K.V., Adv. for Appellants-Revenue. 1.Learned counsel for the Appellants-Revenue hasbrought to the notice of this Court that the Central Board|of Direct Taxes, Department of Revenue, Ministry ofFinance, Government of India, New Delhi, has recently|issued 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. Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS,M/s. Central Power Research Institute 3/13) 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 (Pt) Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board Direct Taxes| New Delni the 1][th]July, 2018 Subject: Revision of monetary [imits for filing of appeals by 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. Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS,M/s. Central Power Research Institute 4/13| 2? [niSupersessIionof the above Circular, it has|been aecided by the Board that departmental|appeals may be filed on merits before Income Tax|Appellate Tribunal and High Courts and SLPs/|appeals before Supreme Court keeping in view the|monetary limits and conditions specified below. 3. Henceforth, appeals/ SLPs shall not be filed tncases 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 decidedon meritsof theCase, 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 sucn total income been reduced by|the amount of income in respect of the Issues| 3. Henceforth, appeals/ SLPs shall not be filed tncases 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 decidedon meritsof theCase, 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 sucn total income been reduced by|the amount of income in respect of the Issues| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS,M/s. Central Power Research Institute 5/13| against which appeal is intended to be filed|(nereinafter referred to as aisputed issues’).|Further, ‘tax effect’ shall be tax includingapplicabie surcharge and cess.|However, the.tax will not include any interest thereon, except|where chargeability of interest itself is in dispute.In case the cnargeability of interest is tne issue|under dispute, the amount of interest shall be thetax effect. In cases where returned loss [IS freGuCEor 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 monetary Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS, M/s. Central Power Research Institute 6/13| limitspecified|In|Pala3.Tnotherwords,nencefortn, appeals can be filed only with referenceto the tax effect in the relevant assessment year.However, in case of a composite order of any HighCourt or appellate authority, which involves more|than one assessment year and common issues in|more than one assessment year, appeals snail 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 wnhicn tax effectexceeds the monetary limit prescribed. IN case|wnere a composite order/ Judgement involves morethan one assessee, each assessee snall be dealt|witn 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, Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 7/13| A = tne total income assessed as per the provisionsother tnan tne provisions contained in section|115JB or section 115JC (nerein calieaq generalprovisions); 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 wouid Nave peen|chargeable nad the total income assessed as per|the provisions contained in section 115JB or section1I5JC was reduced by tne 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 snalli not be reduced fromtotal income assessed while determining thneamount under item D. 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 wouid Nave peen|chargeable nad the total income assessed as per|the provisions contained in section 115JB or section1I5JC was reduced by tne 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 snalli not be reduced fromtotal income assessed while determining thneamount under item D. Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 8/13| 7. In a case where appeal before a Tribunal ora Court ts 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 thedecision 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 ontne disputed issues.The Income-tax Departmentsnail not be preciuded 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| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 9/13| 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. T[hnDepartmental representatives/counsels must make|every effort to bring to tne notice of the Tribunal or the Court that the appeal in sucn cases was not|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 tnat|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| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 10/13. be maintained in a systemic manner for easy|retrieval. 10. Aaverse Judgments relating to the following|ISSUCSshouldbe|contestedonmeritsnotwitnstanaing tnat the tax effect entailed is less|than the monetary limits specified in para 3 above|or there Is no tax effect: (a) Where tne Constitutional validity of thneprovisions of an Act or Rule is under cnallenge, or (b) Where Board’s order, Notification, Instruction|or Circular Nas been neld to be iilegal or ultra vires,Or 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| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 10/13. be maintained in a systemic manner for easy|retrieval. 10. Aaverse Judgments relating to the following|ISSUCSshouldbe|contestedonmeritsnotwitnstanaing tnat the tax effect entailed is less|than the monetary limits specified in para 3 above|or there Is no tax effect: (a) Where tne Constitutional validity of thneprovisions of an Act or Rule is under cnallenge, or (b) Where Board’s order, Notification, Instruction|or Circular Nas been neld to be iilegal or ultra vires,Or (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|snail not apply to writ matters and Direct tax|matters other than Income tax. Filing of appeals inother Direct tax matters shall continue to begoverned by relevant provisions of statute and|rules. Further, in cases wnere the tax effect is not| Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS,M/s. Central Power Research Institute 11/13. guantifiable or not involved, such as the case oOfregistration of trusts or institutions under section|12A/ 12AA of the IT Act, 1961 etc., filing of appealsnail not be governed by tne limits specified in para3 above and decision to file appeals in such cases|may be taken|on meritsof a particular Case. 12. It is clarified that the monetary limit of Rs. 20lakns for filing 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 consideredhenceforth. Similarly, references to High Courts|and SLPs/ appeals before Supreme Court below themonetary limit of Rs. 50 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 henceforth. 13. This Circular will apply to SLPs/appeals/cross|objections/references to be filed henceforth in|SC/HCs/Tribunaland|ItShall]also|applyretrospectively to pending SLPs/ appeals/ cross|objections/references. Pending appeals Delow Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another | VS,M/s. Central Power Research Institute 12/13. the specified tax limits in para 3 above maybe witndrawn/ not pressed. 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. (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 not press this appeal and seeks leave of the Court to withdraw|the present appeal in termsof |paragrapn - 13of the said.Circular. Date of order:25.07.2018. I.T.A. No.214/2018The Commissioner of Income Tax and another |VS,M/s. Central Power Research Institute 13/13 4Accordingly, in view of the aforesaid Circular issuedby the Central Board of Direct Taxes, the present appeal isdisposed of as withdrawn/not pressed without answering|the purported substantial questions of law. Copy of tnis order be sent to the respondent-Assessee, forthwith. mV Sd/-.JUDGE| Sd/-.JUDGE|