DCIT, Circle - 10(1), Kolkata , Kolkata V. M/s. Dr. KPC Life Sciences Pvt. Ltd., (formerly Chemgen Pharma International Pvt. Ltd.,), South 24 Parganas

ITA 1288/KOL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8898 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: GOUTAM BANERJEE
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1288/KOL/2017 ( / ASSESSMENT YEAR: 2006-07) DCIT, CIRCLE-10(1), KOLKATA P-7, CHOWRINGHEE SQUARE, 3 RD FLOOR, KOLKATA 700 069. VS. M/S DR. KPC LIFE SCIENCES PVT. LTD. (FORMERLY CHEMGEN PHARMA INTERNATIONAL PVT. LTD.) SECTOR-II, FALTA SEZ, RAM NAGAR, SIMULBERIA, 24PGS(S)-743504. ./ ./PAN/GIR NO.: AACCC 2999 R (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI PINAKI MUKHER JEE, ADDL. CIT, SR. DR RESPONDENT BY : SHRI GOUTAM BANERJEE , FCA / DATE OF HEARING : 26/12/2018 /DATE OF PRONOUNCEMENT : 26/12/2018 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINI NG TO ASSESSMENT YEAR 2006-07, IS DIRECTED AGAINST AN ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-18, KOLKATA IN APPEAL NO.485/CIT(A)-1 8/16-17/CIRCLE-10(1), KOL, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) DATED 31.12.2008. 2. RECENTLY THE CBDT HAS ISSUED CIRCULAR NO. 3 /2018 DATED 11.07.2018, WHEREBY THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE SUPREME COURT HAVE BEEN INCREASED AS MEASURE FOR REDUCING LITIGAT ION. THE REVISED MONETARY LIMITS LAID DOWN IN PARA-3 OF THIS CIRCULAR AND THE MANNER OF COMPUTING TAX EFFECT AS LAID DOWN IN PARA-4 OF THIS CIRCULAR ARE AS FOLL OWS: M/S DR. KPC LIFE SCIENCES PVT. LTD. ITA NO.1288/KOL/2017 ASSESSMENT YEAR: 2006-07 P PP PA AA AG GG GE EE E | || | 2 22 2 3 . HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: SL. NO. APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 20,00,000/- 2. BEFORE HIGH COURT 50,00,000/- 3. BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CH ARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESP ECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER R EFERRED TO AS 'DISPUTED ISSUES). FURTHER, 'TAX EFFECT' SHALL BE TAX INCLUDING APPLIC ABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THER EON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARG EABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENA LTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE O RDER TO BE APPEALED AGAINST. 3. IN PARA-13 OF THE SAID CIRCULAR IT HAS FURTHER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RE LEVANT PARA-13 OF THE CIRCULAR READS THUS: 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SH ALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/APPEALS/CROSS OBJEC TIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN P ARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. 4 . IN THE PRESENT CASE, THE TAX EFFECT IN THIS APP EAL BY THE REVENUE IS LESS THAN RS.20,00,000/-. THOUGH THIS APPEAL HAD BEEN FILED BY THE REVENUE ON 02.06.2017 AND WAS WITHIN THE MONETARY LIMIT IN THE FORM OF TA X EFFECT FOR FILING APPEALS BEFORE TRIBUNAL, IN VIEW OF PARA-13 OF THE CIRCULAR OF CBDT, EVEN SUCH APPEALS WILL BE GOVERNED BY THE NEW MONETARY LIMITS LAID DO WN IN THE CBDT CIRCULAR NO.3/2018 REFERRED TO ABOVE. M/S DR. KPC LIFE SCIENCES PVT. LTD. ITA NO.1288/KOL/2017 ASSESSMENT YEAR: 2006-07 P PP PA AA AG GG GE EE E | || | 3 33 3 5. IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX CO URT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION L TD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID D OWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN F ILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT CIRCULAR NO.3 DATED 11.07.2018. 5.1. IN THE EVENT, THE REVENUE FINDS AT A LATER POI NT OF TIME THAT THE TAX EFFECT IN THE APPEAL IS MORE THAN RS.20 LAKHS OR DESPITE LOW TAX EFFECT THE APPEAL OF THE REVENUE IS MAINTAINABLE, THE REVENUE IS AT LIBERTY TO MOVE THIS TRIBUNAL FOR RECALLING OF THIS ORDER. 6. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FI LED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CO NTRARY TO THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED IN LIMINE . 7. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.12.2018 . SD/- ( A.T.VARKEY ) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 26/12/2018 ( SB, SR.PS ) M/S DR. KPC LIFE SCIENCES PVT. LTD. ITA NO.1288/KOL/2017 ASSESSMENT YEAR: 2006-07 P PP PA AA AG GG GE EE E | || | 4 44 4 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. /THE APPELLANT- DCIT, CIRCLE-10(1), KOLKATA 2. ! / THE RESPONDENT- M/S DR. KPC LIFE SCIENCES PVT. LT D. (FORMERLY CHEMGEN PHARMA INTERNATIONAL PVT. LTD.) 3. ' ( ) / THE CIT(A), 4. ' / CIT 5. #$% &&'( , '( , / DR, ITAT, KOLKATA 6. %)*+ / GUARD FILE. !# &