Itta/79/2012 Of The Commissioner Of Income Tax-Iv v. Priyadarshini Spinning Mills Ltd

THE HONOURABLE SRI JUSTICE GODA RAGHURAMANDTHE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO ITTA No. 79 of 2012 Dated: 05-10-2012 Between: The Commissioner of Income Tax-IVHyderabad And Priyadarshini Spinning Mills Ltd.,Hyderabad …Appellant …Respondent. Judgment:(Per Hon’ble Sri Justice Goda Raghuram) This appeal by the Revenue under Section 260-A of the IncomeTax Act, 1961 is preferred to consider the following substantialquestion of law framed: Whether on the facts and in the circumstances ofthe case, the Tribunal was correct in law in dismissingthe departments’ appeal on the ground that the tax effectis less than Rs. 2 lacs ignoring the fact that the tax effectas a result of the order of the CIT (A) would beRs.18,47,946/-? Notice before admission was ordered in this appeal on 17-9-2012 and the learned Standing counsel directed to serve thenotice on the respondent departmentally and file proof of service. ByMemo dated 28-9-2012 (filed by the learned Standing counsel for theappellant) acknowledgement of proof of service of notice in this appealon the respondent has been filed and it is apparent that the respondentwas served notice on 26-9-2012. When the matter is taken up todayhowever there is no representation on behalf of the respondent-assessee. Hence we dispose of this appeal on merits. The Income Tax Appellate Tribunal, Hyderabad Bench (for short‘the Tribunal’), by the order dated 3-1-2011 in ITA No. 1170/Hyd/09 (impugned) dismissed theRevenue’s appeal on the singular ground that the tax effect in theappeal is less than Rs.2 lakhs and in view of Instruction No.2 of 2005dated 24-10-2005 issued by the CBDT, the appeal ought not to havebeen preferred by the Revenue. In this appeal, the Revenue contests the finding of the Tribunal(as to the quantum of the tax effect), recorded for dismissing the appeal. By the order of Assessment dated 18-12-2007 the JointCommissioner of Income Tax, Range 16, Hyderabad had disallowedthe claim of the assessee that he has debited commission on exportsales at Rs.50,50,025/-; and the said amount was added to the incomeof the assessee under Section 40(a)(i) of the Act. The appealpreferred by the assessee was allowed by the CIT (Appeals), who bythe order dated 22-9-2009 deleted the addition of Rs.50,50,070/-. It isthe claim of the Revenue in this appeal as set out in the substantialquestion of law framed that the tax implication on the addition ofRs.50,50,070/- as a result of the order of the CIT (Appeals) would beRs.18,47,946/-. On the aforesaid analysis the order of the Tribunal suffers from asubstantial error of misconception of an essential fact and requires tobe invalidated. Consequently the order of the Tribunal dated 3-1-2011in ITA No. 1170/Hyd/09 is set aside. In the facts and circumstances, the matter is remitted to theTribunal which shall take up the appeal and dispose it of on merits andin accordance with law. No costs. 5[th] October, 2012 _________________________ GODA RAGHURAM, J GRR _______________________________ M.S.RAMACHANDRA RAO, J