The DCIT, Navsari Range, Navsari V. M/s. Peass Industrial Engineers Ltd., Navsari

ITA 1380/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0214 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-08-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: M K PATEL
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C. AGRAWAL, AM) ITA NO.1380/AHD/2010 A. Y.: 2006-07 THE D. C. I. T., NAVSARI CIRCLE, NAVSARI VS M/S. PEASS INDUSTRIES ENGINEERS LTD., MANEKLAL ROAD, NIAVSARI PA NO. AABCP 3786 G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. DHANESTA, DR RESPONDENT BY SHRI M. K. PATEL, AR O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 23 RD NOVEMBER,2009 FOR THE ABOVE ASSESSMENT YEAR 2006-07 , CHALLENGING THE DELETION OF ADDITION OF RS.2,40,000/- BEING INTERES T INCOME ON ADVANCES AND DELETION OF ADDITION OF RS.6,000/- MADE ON ACC OUNT OF DISALLOWANCE OF INTEREST EXPENSES. THE LEARNED CIT(A) FOLLOWING THE ORDERS OF THE PRECEDING ASSESSMENT YEARS 1996-97, 1997-98 AND 200 3-04 DELETED BOTH THE ADDITIONS. THE LEARNED DR ADMITTED THAT TAX EFF ECT IN THIS CASE IS BELOW RS.2.00 LACS AND NO QUESTION OF LAW IS INVOLV ED IN THE MATTER. 2. IT IS NOTICED THAT THE TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED LIMIT UNDER INSTRUCTION NO.2/2005 DATED 24-10-2005 AND THE TAX EFFECT ON THIS IS LESS THAN RS.2 LACS AND T HE SAME HAS BEEN ADMITTED BY THE LEARNED DR ALSO AT THE TIME OF HEAR ING. 3. IT SEEMS THAT RECENTLY HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT V. CONCORD PHARMACEUTICALS IN TAX APPEAL NO.402/2001 VIDE ORDER ITA NOS. 1380/AHD/2010 DCIT, NAVSARI VS M/S. PEASS INDUSTRIES ENGINEERS LT D. 2 DATED 05-08-2008 HAS FINALLY SETTLED THE ISSUE REGA RDING TAX EFFECT CASES. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 25. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL, A CIRCULAR IS NOT IN FORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS APPEAL, IN S UCH CASES, THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE A PPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD.,(2008) 214 CTR 389 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS, SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTR UCTIONS. 26. IN PITHWA ENGINEERING WORKS CASE [2005] 276 I TR 519 THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIA L NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGA TION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CI RCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. TH E DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRES PECTIVE OF THEIR DATE OF FILING. 27. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT OR SUPREME COURT , THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS A ND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HOWEVER, ON THIS GROUND THE MATTERS CA NNOT BE REMANDED TO THE TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DE PARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEING A N EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS W HERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS D ISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER, AN ITA NOS. 1380/AHD/2010 DCIT, NAVSARI VS M/S. PEASS INDUSTRIES ENGINEERS LT D. 3 INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MO VE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DEC IDING THE APPEAL ON MERITS. 28. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIG HTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE C IRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INS ERTED PROVISIONS CONTAINED IN SECTION 268A(4) MAKE IT OBL IGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS ARE INTERNAL M ATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE T HAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS, INSTRUCTIONS OR CI RCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF F ILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION, IT IS NOT OPEN TO T HE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCR IBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT TH E DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT . IT IS, HOWEVER, EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DE CISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OB JECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. . CONSIDERING ALL THE AFORESAID ISSUES, WE DISMISS ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER IN THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PARTICULAR APP EAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFECT. IT IS E XPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHIL E APPLYING THE RELEVANT CIRCULAR TO THE FACTS OF THE CASE AT T HE TIME OF DECIDING APPEALS. ITA NOS. 1380/AHD/2010 DCIT, NAVSARI VS M/S. PEASS INDUSTRIES ENGINEERS LT D. 4 4. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFFE CT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTICALS (SUPRA), WE DISMISS THIS APPEAL OF THE REVENUE. 5. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 06-08-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 06-08-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD