Dy CIT, Pune V. Kamal Jestaram Kapadia, Pune

ITA 1257/PUN/2013

• Counselvise Citation: 125724514 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Question of law; Tax effect
• Section: 260A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1257/PN/2013 (ASSESSMENT YEAR 2008-09) DY.CIT, CIRCLE-4, PUNE .. APPELLANT VS. KAMAL JESTARAM KAPADIA, 81A, PORWAL PLAZA, EAST STREET, GALLERIA, PUNE. .. RESPONDENT PAN NO.ABKPK9411A ASSESSEE BY : SHRI SUNIL PATHAK DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 11-12-2014 DATE OF PRONOUNCEMENT : 12-12-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30-01-2013 OF THE CIT(A)-II, PUNE R ELATING TO ASSESSMENT YEAR 2008-09. 2. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET F ILED A CHART STATING THAT THE TOTAL TAX EFFECT IN THE APPE AL FILED BY THE REVENUE IS RS.3,75,741/-. REFERRING TO CBDT INSTRUCTION NO.05/2014 DATED 10-07-2014 HE SUBMITT ED THAT THE MONETARY LIMIT FOR FILING OF APPEAL BY THE REVENUE HAS BEEN INCREASED TO RS. 4 LAKHS. REFERRING TO TH E DECISION OF THE HONBLE BOMBAY HIGH CURT IN THE CAS E OF CIT VS. VIRENDRA AND CO. REPORTED IN 253 CTR 488 AN D THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF 2 ITO VS. SHRI NARESHKUMAR G. MITTAL (IND.) VIDE ITA NO.1137/PN/2011 ORDER DATED 19-11-2014 FOR A.Y. 200 8- 09 HE SUBMITTED THAT THE APPEAL FILED BY THE REVENU E IS NOT MAINTAINABLE DUE TO TAX EFFECT BEING LESS THAN RS.4 LAKHS. HE ACCORDINGLY SUBMITTED THAT THE APPEAL FILED BY T HE REVENUE BE DISMISSED. 3. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE FAIRLY CONCEDING THAT THE TAX EFFECT IS LESS THAN RS. 4 LAKHS SUBMITTED THAT THE CBDT INSTRUCTION NO. 05/2014 DATED 10-07-2014 IS APPLICABLE TO APPEALS F ILED ON OR AFTER THAT DATE AND CANNOT BE APPLIED TO THE APP EALS FILED PRIOR TO THAT DATE. 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND AN IDENTICAL ISSUE HAD COM E UP BEFORE THE TRIBUNAL IN THE CASE OF ACIT VS. NYATI INFRASTRUCTURE PVT. LTD. VIDE ITA NO.585/2011 ORDER DATED 27-11-2014 WHERE IT HAS BEEN HELD AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSE SSEE. THERE IS NO DISPUTE TO THE FACT THAT THE TAX EFFECT I N THE INSTANT CASE IS LESS THAN RS. 4 LAKHS AND TO BE PRECISE IT IS RS.3 ,01,003/-. THE APPEAL HAS BEEN FILED BY THE REVENUE ON 06-05-2 011. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUN AL IN THE CASE OF SHRI SANJAY PRABHAKAR JUNNARKAR VIDE ITA NO.791/PN/2013 ORDER DATED 26-11-2014 WHERE ONE OF US (AM) IS A PARTY. THE RELEVANT OBSERVATIONS OF THE TR IBUNAL WHILE DISMISSING THE APPEAL FILED BY THE REVENUE ON TH E ISSUE OF MONETARY LIMIT ARE AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE REVENUE IS IN APPEAL AGAINST THE RELIEF GRANTED TO THE ASSESSEE BY THE CIT(A) IN RESPECT OF ADDITION MADE B Y THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD MADE THE ADDI TION WHILE COMPLETING ASSESSING PROCEEDINGS UNDER SECTION 143( 3) OF THE ACT, WHICH IN TURN, DELETED BY THE CIT(A) AS UNDER:- 3 PARTICULARS AMOUNT DEPOSIT EXPENSES FOR BUSINESS ASSOCIATES 5,58,948 PROVISION FOR VAT AND OTHER TAXES 2,00,000 EXPENSES FOR FRANCHISEE DEVELOPMENT 2,67,640 EXPENSES FOR MLM DEVELOPMENT 2,67,640 LAPTOP/IT SOLUTION EXPENSES 90,000 TOTAL 11,48,931 5. THE REVENUE HAD FILED APPEAL AGAINST SUCH DELETION OF ABOVE ADDITION BY THE CIT(A). WHEN THE MATTER WAS T AKEN UP FOR HEARING, IT WAS POINTED OUT BY THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE THAT AS PER CBDT INSTRUCTI ON NO.5 OF 2014, DATED 10.07.2014, THE APPEAL FOR THE YEAR IS NOT MAINTAINABLE. 6. UNDER THE PROVISIONS OF SECTION 268(1) OF THE ACT, THE CBDT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONET ARY LIMITS FOR THE REVENUE TO FILE APPEALS BEFORE THE TRI BUNAL, ALL THE HIGH COURTS AND THE SUPREME COURT. THE CBDT FROM TI ME TO TIME, ISSUES INSTRUCTIONS FIXING THE MONETARY LIMITS WITH THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWER SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HAD REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.20 11 WHEREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE DEPARTMENTAL APPEALS IN INCOME TAX MATTERS BEFORE TH E APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT WE RE SPECIFIED. THE INSTRUCTIONS ISSUED ON 10.07.2014 WERE I N SUPERSESSION OF THE EARLIER INSTRUCTIONS AND THE MONETARY LIMITS HAVE BEEN ENHANCED BY THE PRESENT INSTRUCTION A ND IT HAS BEEN PROVIDED THAT THE APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GI VEN HEREUNDER: S NO APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (I N RS) 1. BEFORE APPELLATE TRIBUNAL 4,00,000/- 2. U/S 260A BEFORE HIGH COURT 10,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- 7. THE REVISED MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 L ACS. FURTHER, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECT ED THAT THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATE LY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, THE DISPUTED ISSUE ARISES IN MORE T HAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD B E FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH, THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDED THE MO NETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APP EALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIFIED THA T IF THE APPEAL IS TO BE FILED IN RESPECT OF THE YEAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUCH APPEALS COULD ALSO BE 4 FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN PRESCRIBED MONETARY LIMITS. 8. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HAD F ILED THE APPEALS ON 04.04.2013. ADMITTEDLY, IN ALL THE Y EARS UNDER APPEAL, THE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIB ED IN INSTRUCTION NO.5 OF 2014 ISSUED BY THE CBDT. AT THE T IME OF HEARING OF THE APPEALS, THE MONETARY LIMITS PRESCRIBED BY THE CBDT STAND REVISED BY THE SAID INSTRUCTION NO.5 OF 2014 , DATED 10.07.2014 UNDER WHICH, IT HAS BEEN PROVIDED THAT WH ERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE ASSESSM ENT YEARS THEN, NO APPEALS CAN BE FILED BEFORE THE APPELL ATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAI D REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE F ILING OF THE APPEALS BY THE REVENUE COULD BE APPLIED TO TH E PENDING APPEALS OR APPLICABLE ONLY TO THE NEW CASES TO BE FILE D BY THE REVENUE AFTER THE DATE OF ISSUE OF THE INSTRUCTIONS. 9. WE FIND THAT THE SAID ISSUE HAS BEEN CONSIDERED BY T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA). THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER DIVISION OF BOMBAY HIGH COURT I N THE CASE OF CIT VS. POLYCOTT CORPORATION REPORTED IN (200 9) 318 ITR 144 (BOM) WHEREIN, IT WAS HELD AS UNDER:- 8. IN CASE OF 'COMMISSIONER OF INCOME TAX V/S POLYC OTT CORPORATION' REPORTED AT '(2009) 318 ITR 144 (BOM), A ANOTHER DIVISION BENCH OF THIS COURT CONSTRUED THE SAME INS TRUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BEN CH OBSERVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULA R, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINI ON, THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THO UGH IT IS PURSUANT TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT THE COURT HAS TO CONSIDER IS THE PLAIN LA NGUAGE OF THE PARA AND THE OBJECT BEHIND THE SAID PROVISIONS. THE OBJECT APPEARS TO BE NOT TO BURDEN COURTS AND TRIBUNALS IN RESPECT OF MATTERS WHERE THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED. EVEN BEFORE THIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BEING ON 24TH OCT., 2005 WHERE THE MON ETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTIONS THE ONLY EXCEP TION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUESTION OF LA W OF IMPORTANCE AS WELL AS IN CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EITHER IN THE CASE CONCERNED OR IN SIMILAR C ASE, APPEAL SHOULD BE FILED WITHOUT BEING HINDERED BY THE MONET ARY LIMITS. THE PRESENT INSTRUCTIONS SEEM EVEN TO LIMIT THE ISS UES INSOFAR AS THE SAME QUESTION OF LAW OR RECURRING ISSUE EXCEPT T O THE EXTENT PROVIDED IN PARA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS I T WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF TH E DISPUTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR T HEN AN APPEAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEA RS WHERE THE MONETARY LIMIT AS SPECIFIED IN PARA 3 OF THE INSTRU CTION. THE EXCEPTION, HOWEVER, IS CARVED OUT IN RESPECT OF A CO MPOSITE ORDER OF THE HIGH COURT OR APPELLATE AUTHORITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PASSED A COMPOSITE O RDER IN 5 RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTION A ND/OR ON DIFFERENT QUESTION AND FOR ONE OF THE ASSESSMENT YE ARS, THE TAX EFFECT IS MORE THAN THE MONETARY LIMIT THEN THE APP EAL SHALL ALSO BE FILED IN RESPECT OF ALL THE ASSESSMENT YEARS. TH E SUBMISSION ON BEHALF OF THE ASSESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE BEG TO DISAGREE ON A PLAIN AND LIT ERAL CONSTRUCTION OF THE INSTRUCTION. THE EXPRESSION 'WH ICH INVOLVES MORE THAN ONE YEAR' WOULD HAVE NO MEANING IF IT WAS RESTRICTED ONLY TO THE EXPRESSION 'COMMON ISSUES'. THE EXPRESS ION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE REA D TO MEAN AN ORDER IN RESPECT OF THE SAME ASSESSEE FOR MORE THAN ONE YEAR. AN (ORDER) DISPOSING OF SEVERAL APPEALS ON A COMMON QU ESTION OF LAW BY APPELLATE AUTHORITY, CANNOT BE SAID TO BE A COMPOSITE ORDER AS THE ORDER INVOLVES APPEALS BY DIFFERENT PE RSONS, WHICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TOGETHER FOR THE PURPOSE OF DISPOSAL ON THAT ISSUE. IN OUR OPINION, THIS WOULD BE THE CORRECT READING OF PARA 5 OF THE INSTRUCTION.' 10. THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS U NDER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM THE AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS I SSUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BO ARD OF DIRECT TAXES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CASES AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDE R SECTION 268A OF THE INCOME TAX ACT, WHICH IS AN EXCEPTION TO THE P ROVISIONS OF SECTION 260 OF THE ACT. THE CBDT BEING MINDFUL OF T HIS POSITION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINI ON, THEREFORE, THE INSTRUCTIONS WOULD BE APPLICABLE TO PENDING CAS ES AS WELL. WE HAVE ALREADY FOUND THAT THE INSTRUCTION NO. 5 OF 20 08 AND INSTRUCTION NO. 3 OF 2011 ARE PARA-MATERIA. THE INS TRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRETED BY THIS COURT IN CIT V/S MADHUKAR INAMDAR (SUPRA). IT IS NOT DISPUTED THAT T HIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AN D THEREFORE STILL HOLDS THE FIELD. 11. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCTI ON ISSUED BY THE CBDT UNDER WHICH, THE MONETARY LIMIT FOR FIL ING THE APPEALS BEFORE THE APPELLATE AUTHORITIES, TRIBUNALS HA S BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFECT EXCEEDING RS.4 LACS WERE MAINTAINABLE. IN THE PRESENT APPEAL FILED BY THE REVENUE, THE MONETARY LIMIT ADMITTEDLY , IS LESS THAN RS.4 LACS. IN VIEW OF INSTRUCTION NO.5 OF 2014 WHICH ARE APPLICABLE NOT ONLY TO THE NEW APPEALS TO BE FILED B Y THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE T RIBUNAL, WE DISMISS THE APPEAL FILED BY THE REVENUE BECAUSE OF SM ALL TAX EFFECT. 5.1 SINCE THE TAX EFFECT IN THE IMPUGNED APPEAL FIL ED BY THE REVENUE IS ADMITTEDLY BELOW RS.4 LAKHS, THEREFORE, IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (SUPRA), WE HOLD THAT THE CBDT INSTRUCTION NO.05/201 4 RAISING THE MONETARY LIMIT FOR FILING OF APPEAL BY THE REVE NUE TO RS. 4 LAKHS IS APPLICABLE TO THIS CASE ALSO EVEN THOUGH THE A PPEAL HAS BEEN FILED BY THE REVENUE PRIOR TO THE DATE OF ISSUE OF SUCH INSTRUCTION REVISING THE MONETARY LIMIT. THEREFORE, THE APPEAL 6 FILED BY THE REVENUE IS NOT MAINTAINABLE. ACCORDING LY, THE SAME IS DISMISSED. 4.1 SINCE THE TAX EFFECT IN THE IMPUGNED APPEAL IS ADMITTEDLY LESS THAN RS.4 LAKHS, THEREFORE, FOLLOWI NG THE RATIO LAID DOWN IN THE ABOVE CITED CASE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12-12-2014. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 12 TH DECEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. CIT-II, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE