Asstt.CIT Cir.9, Pune V. Mahavir Steel Industries Ltd., Pune

ITA 1340/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49727 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H C LEUVA
• Assessee Lawyers: R G NAHAR
• Keywords: Question of law; Tax effect
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDIC IAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 1340/PN/10 (ASSTT. YEARS: 2007-08) ASSTT. COMMISSIONER OF INCOME-TAX, .. APPELLANT CIR. 9, PUNE VS. MAHAVIR STEEL INDUSTRIES LTD, .. RESPONDENT E/4/24 MIDC, BHOSARI, PUNE PAN:AABCM1744K APPELLANT BY: SHRI H.C. LEUVA RESPONDENT BY: SHRI R.G.NAHAR ORDER PER G.S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)V, PUNE DATED 17.8.2010 WHICH, IN TURN, HAVE ARISEN FROM ORDER OF THE ASSESSING OFFICER DAT ED 18.11.2009 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT), PERTAINING TO THE ASSESSMENT YEARS 2007-08. 2. THE GROUNDS OF APPEAL, AS RAISED BY THE REVENUE, READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS 1, 55,845/- MADE U/S 14A BEING ITA NO 1340/PN/10 MAHAVIR STEE L INDS. LTD., PUNE 2 THE INTEREST AND OTHER EXPENDITURE INCURRED ON ACCO UNT OF EARNING EXEMPT DIVIDEND INCOME. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD CIT (A) WAS JUSTIFIED IN NOT FOLLOWING HIS PREDECESSORS DE CISION ON THE ISSUE OF DISALLOWANCE U/S 14A OF THE IT ACT 1961 IN ASSESSEE S OWN CASE FOR AY 2005-06 INVOLVING THE SAME SET OF FACTS AND CIRCUMSTANCES. 3. AT THE TIME OF HEARING, THE LEARNED REPRESENTATI VE FOR THE RESPONDENT- ASSESSEE RAISED A PRELIMINARY OBJECTION BY POINTING OUT INSTRUCTION NO. 3/2011 DATED 09.02.2011 ISSUED BY THE CENTRAL BOARD OF DIR ECT TAXES (CBDT) FIXING THE MONETARY LIMITS FOR FILING OF DEPARTMENTAL APPEALS BEFORE THE TRIBUNAL. IN TERMS OF THE SAID INSTRUCTION, MONETARY LIMIT FOR FILING DEP ARTMENTAL APPEAL TO THE TRIBUNAL HAS BEEN FIXED AT RS 3 LAKHS. IN OTHER WORDS, IN CA SES WHERE THE TAX EFFECT OF THE ADDITIONS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS LESS THAN RS 3 LAKHS, NO APPEAL SHALL BE FILED BY THE DEPARTMENT I N SUCH CASES. ACCORDING TO THE LEARNED REPRESENTATIVE, THE TAX EFFECT WITH RESPECT TO THE RELIEF ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE CAPTION ED APPEAL IS BELOW RS 3 LAKHS. SUCH FACTUAL MATRIX HAS NOT BEEN CONTESTED B Y THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, THOUGH THE RELIEF A LLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS SOUGHT TO BE ASSAILED ON MERITS. 5. THE LEARNED REPRESENTATIVE FOR THE RESPONDENT-A SSESSEE FURTHER RELIED UPON A RECENT DECISION OF THE MUMBAI BENCH OF THE T RIBUNAL IN THE CASE OF ITO V SHRI ASHOK G. DHANDHARIAI, MUMBAI IN ITA NO2460/MUM /2010 DATED 28.2.2011 TO CANVASS THAT THE REVISED INSTRUCTIONS DATED 9.2. 2011 (SUPRA) ARE APPLICABLE TO THE PRESENT CASE ALSO, ALTHOUGH SUCH APPEALS HAVE B EEN FILED ON A PRIOR DATE. 6. IN VIEW OF THE PRECEDENT BROUGHT OUT BY THE LEAR NED REPRESENTATIVE FOR THE RESPONDENT, FACTUALLY THE CAPTIONED DEPARTMENTAL AP PEAL IS LIABLE TO BE CONSIDERED TO HAVE BEEN FILED CONTRARY TO THE CBDT INSTRUCTION DATED 9.2.2011 (SUPRA). THE TRIBUNAL FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT ITA NO 1340/PN/10 MAHAVIR STEE L INDS. LTD., PUNE 3 IN THE CASE OF CIT V MADHUKAR K. INAMDAR (HUF) 318 ITR 149 AND CIT V PITHWA ENGINEERING WORKS 276 ITR 519 (BOM) FOUND IT APPROP RIATE TO DISMISS THE DEPARTMENTAL APPEAL ON THE GROUND THAT TAX EFFECT I S LESS THAN RS 3 LAKHS, EVEN IN A CASE WHERE THE DEPARTMENTAL APPEALS WAS FILED PRI OR TO THE DATE OF THE CBDT INSTRUCTION DATED 9.2.2011 (SUPRA). THE FOLLOWING D ISCUSSION IN THE ORDER IS WORTHY OF NOTICE: 5. WE HEARD BOTH THE PARTIES. THE CASE OF CIT VS. CHHAJER PACKAGING & PLASTICS PVT. LTD. 300 ITR RELIED ON BY THE DR IS DISTINGUIS HABLE FROM THE FACTS OF THE PRESENT CASE. AT PARA 12 PAGE 184 OF THE DECISION IN THE CA SE OF CHHAJER PACKAGING & PLASTICS PVT. LTD. IT HAS BEEN HELD AS FOLLOWS: OTHERWISE ALSO, PARAGRAPH OF THIS CIRCULAR ITSELF SAVES CERTAIN APPEALS FROM BEING OBSTRUCTED DUE TO FINANCIAL LIMITS. PARAGRAPH 3 REA DS: THE BOARD HAS ALSO DECIDED THAT IN CASES INVOLVING SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS IN CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EITHER IN THE CASE CONCERNED OR IN SIMILAR CASES, SHOULD BE SEPARATELY CONSIDERED ON THE MERITS WITHO UT BEING HINDERED BY THE MONETARY LIMITS. IT IS EVIDENT THAT, WHENEVER THERE IS A SUBSTANTIAL QUESTION OF LAW, OR QUESTION OF LAW WHICH IS LIKELY TO RECUR IN FUTURE, THE DEPARTM ENT IS NOT PROHIBITED FROM FILING AND PURSUING APPEALS. WE BELIEVE THAT THE SAVING CL AUSE SAVES THE PRESENT APPEAL SINCE IT INVOLVES A QUESTION OF LAW REGARDIN G INTERPRETATION OF SECTION 275(1)(C) OF THE ACT, AND MORE PARTICULARLY THE ASP ECT OF MANNER IN WHICH THE LIMITATION SHOULD BE COMPUTED IN THE LIGHT OF THE S AID PROVISIONS. WE HAVE, THEREFORE, PROCEEDED TO HEAR THE ADVOCATES ON THE M ERITS. IN OUR OPINION, THE CASE OF CIT V CHHAJER WAS WITH RESPECT OF INTERPRETATION OF 275(1)(C) OF THE ACT AND HENCE CAME UNDER THE EXCEP TION CLAUSE UNDER THE CBDT CIRCULAR AND WAS NOT OBSTRUCTED BY THE MONETARY LIM IT OF RS 3 LAKHS PRESCRIBED BY THE CIRCULAR. THEREFORE THE CASE OF 300 ITR 180 IS INAPPLICABLE TO THE FACTS OF OUR CASE. FURTHER INSTRUCTION NO. 5 DT. 15.5.2008 FIXIN G THE MONETARY LIMIT AT RS 2 LAKHS IS SIMILAR TO THAT OF INSTRUCTION NO. 3 DATED 9.2.2011 WHICH THE ASSESSEE HAS BROUGHT TO OUR NOTICE IN SUPPORT OF HIS CONTENT ION. SINCE BOTH THE INSTRUCTION NOS. 5 & 3 ARE IDENTICAL, THE RATIO OF THE DECISION IN THE CASE OF CIT V PITHWA ENGG. WORK WHICH DEALS WITH INSTRUCTION NO. 5 DT. 1 5.5.2008 SHALL EQUALLY APPLY TO THE PRESENT CASE WHICH FALLS UNDER LNSTRUCTION N O. 3 DATED 9.2.2011. FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF CIT V PITH WA ENGG. WORK WHEREIN IT HAS BEEN HELD THAT IN OUR VIEW, THE BOARDS CIRCULAR D T. 27 TH MARCH, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STI LL UNDECIDED, WE DISMISS THE DEPARTMENTAL APPEAL ON THE GROUND THAT THE TAX EFFE CT IS LESS THAN 3 LAKHS. 7. FOLLOWING THE AFORESAID PRECEDENT, THE CAPTIONED APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED IN VIEW OF CBDT I NSTRUCTION NO. 3 DATED 9.2.2011 (SUPRA) AS THE TAX EFFECT WITH RESPECT TO THE QUANTUM OF RELIEF ALLOWED BY ITA NO 1340/PN/10 MAHAVIR STEE L INDS. LTD., PUNE 4 THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE IMP UGNED YEAR IS BELOW RS 3 LAKHS AND IT HAS NOT BEEN SHOWN THAT THE APPEAL FAL LS UNDER ANY OF THE EXCEPTIONS PROVIDED IN PARA 8 OF THE CBDT INSTRUCTION (SUPRA). WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF APRIL 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 6 TH APRIL, 2011 B COPY OF THE ORDER FORWARDED TO : 1. MAHAVIR STEEL INDUSTRIES LTD. PUNE 2. ACIT CIR.9, PUNE 3. THE CIT(A)-V PUNE 4. THE CIT-V PUNE 5. THE D.R, B BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE