Pr. Commissioner Of Income-Tax-2, Chandigarn v. M/S Modern Steels Ltd

IN THE HIGH COURT OF PUNJAB & HARYANA ATCHANDIGARHITA No.435 of 2017.Date of decision: 14.8.2018 Pr. Commissioner of Income-Tax-2, Chandigarn ..... Appellant VERSUS| M/s Modern Steels Ltd. .... Respondent ITA No.455 of 2017 Pr. Commissioner of Income-Tax-2, Chandigarn| ..... Appellant VERSUS| M/s Modern Steels Ltd.| .... Respondent ITA No.503 of 2017. Pr. Commissioner of Income-Tax-2, Chandigarn| ..... Appellant VERSUS M/s Modern Steels Ltd. .... ReSpOndent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Ms.Urvasni Dnugga, Senior Standing Counsel for|the appellant(s) Mr.Divya Suri, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of a bunch of three appeals,namely, ITA Nos.435, 455 and 503 of 2017 as common.question of law and facts are involved in these appeals. For|brevity, the facts are being taken from ITA No.435 of 2017. 2.To adjudicate the issue regarding jurisdiction revolvesaround the maintainability of appeal before this Court on the|cut-off monetary limits prescribed in Circular No.3/18 issued on|11.7.2018 by the Central Board of Direct Taxes. The relevant|extract of the aforesaid Circular is reproduced as under: BSubject: Revision of monetary limits for filingof appeals by the Department before IncomeTaxAppellateTribunal,High|Courts.anaSLPs/appeals before Supreme Court-measuresfor reducing Iitigation-Reg. Reference is invited to Board's Circular No. 721 of2015 dated 10.12.2015 wherein monetary limits andother conditions for filing departmental appeals (in|Income-tax matters) before Income Tax Appellate|Tribunal, Hign Courts and SLPs/ appeals Defore|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 Tax Appellate — =3= Tridunal and High Courts and SLPs/ appeals Defore|Supreme Court keeping in view the monetary limits|and conditions 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 merelybecause the tax effect in a case exceeds the monetarylimits prescribed above. Filing of appeal in sucn casesis to be decided on merits of the case. xXxXxXxKXKXK xKXKXKXxXXxX 3. The tax effect’ for the assessment years involved in. the present appeals is given below: ITA No.435 of 2017 -4-— 4learned counsel for the revenue submitted that vide|the composite impugned order dated 23.8.2016 passed by the -Income Tax Appellate Tribunal, Cnandigarn, though the ‘tax|effect’ involved is nots~50 lacs, however, the appeals filed bythe revenue(s) are maintainable before this Court in view of the.clause 5 of the aforesaid Circular wnicn Is tn the following terms:“Tne Assessing Officer shall calculate the tax effectseparately for every assessment year in respect ofthe disputed issues in the case of every assessee. If,In the case of an assessee, the disputed issues arisein more than one assessment year, appeal can befiled in respect of such assessment year or years Inwhich the tax effect in respect of the disputed Issuesexceeds the monetary limit specified In para 3. No.appeal shall be filed In respect of an assessment yearor years In which the tax effect Is less than the.monetary limit specified in para 3. In other words,nenceforth, 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 tnvoives more.than one assessment year and common Issues Inmore than one assessment year, appeals shall befiled in respect of all such assessment years even If the tax effect Is less than the prescribed monetarylimits in any of the year(s), if it is decided to fileappeal In respect of the year(s) in which tax effectexceeds the monetary limit prescribed. In case wherea composite order/judgement involves more than oneassessee, eachasSSseSSeShall.pe.dealt with.separately.” | 5.On the other hand, learned counsel for theassessee(s) submitted that In case the entire ‘tax effect’Involved in the present appeals Is calculated, even then it wouldbe less than the cut-oft|monetary limits prescribed i.e. 750 lakhs.Moreover, the aforesaid Circular specifically provides that thecut-off limit prescribed for Tiling the appeal before tne High Courtby the revenue Is ~50 lakhs. Thus, the appeals would not be.maintainable. 6.After hearing learned counsel for the parties, we findforce in the submissions of learned counsel for the assessee(s). ].Tne aforesaid Circular clearly provides that thedepartmental appeals may be Tiled on merits before the Income.Tax Appellate Tridbunal and the Hign Courts and SLPs/appealsbefore the Supreme Court keeping In view the monetary limitsand conaitions prescribed therein. To facilitate the‘jurisdiction’for filing the appeal(s) before the Tribunals/Courts, the cut-ofT — ITA No.435 of 2017 =6- monetary limits are prescribed. According to the Circular, the|revenue may approach this Court where the tax effect’ is more.than monetary limits i.e. ~50,00,000/-. | 8.On a plain reading of clause 5 of the aforesaidCircular on which revenue has placed rellance, we do not findthat any portion supports her contention. According to clause 5,the Assessing Officer Is required to calculate the tax effectseparately for every assessment year relating to disputed issues”In the case of every assessee. The tax effect Involved in eacnyear is to be seen while deciding about filing of an appeal.However, where a composite order has been passed Involving.more than one assessment year and common Issues, appealsShall be filed In respect of all such assessment years even where.tax effect Is less than the prescribed limit In any of theassessment year(s) where decision has been taken to file anappeal relating to a year or years where the tax effect is morethan the monetary limit prescribed. Tne case of eacn assesseeIs to be dealt witn separately in case of any composite order.concerning more than one assessee. QO.It may be noticed that circular No.3/18 dated11.7.2018 issued by theCentral Board of Direct Taxes, NewDelhi prescribes that a monetary limit for filing an appeal before the High Courtis |750 lakhs, whereas Cumulative tax effect | ITA No.435 of 2017 Involved tn all these appeals Is 4,90,122/- which is much belowthe sald limit. 10.In view of the above and also keeping In view the.order of the Apex Court In.Commissioner of Income Tax v.Dnanalekshmi Bank Ltd.,12015] 373 ITR 526 (SC) where the|Supreme Court had dismissed the appeal without going into themerits of the appeal due to low tax effect leaving the question oflaw open, the present appeals are dismissed. It Is, Nowever,Clarified that dismissal of the appeals shall not be taken to beaffirmation of order of the Tribunal on merits. Further, the legalIssue as claimed by the revenue is being left open to be.adjudicated In an appropriate case. (AJAY KUMAR MITTAL)JUDGE| August 14, 2013.KD/gbs (AVNEESH JHINGAN)-JUDGE.Yes / No. Whether speaking / reasoned Yes/ No.Whether ReportableYes / No.