The Asst. CIT, Kakinada V. M/s. Sameera Solvent Oils Pvt.Ltd, Mandapeta

ITA 158/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6737 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S RAVI SHANKAR NARAYANAN
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 158 / VIZ /201 7 (ASST. YEAR : 20 1 2 - 1 3 ) AC IT, CIRCLE - 1, KAKINADA . VS. M/S. SAMEERA SOLVENT OILS PVT. LTD. , (NAME CHANGED AS KRISHNA PRABHAS AGRO OILS PVT. LTD.,) MAREDUBAKA, MANDAPETA MANDAL, E.G. DISTRICT. PAN NO. AAICS 2638 B (APPELLANT) (RESPONDENT) C.O.NO. 60/VIZ/2017 ( ITA NO. 158 / VIZ /201 7 ) (ASST. YEAR : 20 12 - 1 3 ) M/S. SAMEERA SOLVENT OILS PVT. LTD. , (NAME CHANGED AS KRISHNA PRABHAS AGRO OILS PVT. LTD.,) MAREDUBAKA, MANDAPETA MANDAL, E.G. DISTRICT. VS. ACIT, CIRCLE - 1, KAKINADA. PAN NO. AAICS 2638 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI S. RAVI SHANKAR NARAYANAN - SR. DR DATE OF HEARING : 31 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 31 / 0 8 /201 7 . O R D E R THE APPEAL BY THE REVENUE AND THE CROSS OBJ ECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX 2 ITA NO. 158/VIZ/2017 C.O.NO. 6 0/VIZ/2017 ( M/S. SAMEERA SOLVENT OILS PVT. LTD. ) (APPEALS) - 2 , GUNTUR , DATED 11 /0 1 /201 7 FOR THE ASSESSMENT YEAR 2012 - 1 3 . 2. AT THE OUTSET , L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW 10 L AKHS AND AS PER THE CBDT CIRCULAR NO. 21/2015 , DATED 10/12/2015 THE REVENUE IS BOUND TO WITHDRAW THE APPEAL. LEARNED COUNSEL FURTHER SUBMITTED THAT THE ABOVE REFERRED CIRCULAR SIMPLY MENTIONED THAT TAX , WHICH DOES NOT INCLUDE SURCHARGE AND EDUCATION CESS ETC . AND SUBMITTED THAT APPEAL FILED BY THE REVENUE , MAY BE DISMISSED. 3. ON THE OTHER HAND, L EARNED DEPARTMENTAL RE PRESENTATIVE HAS SUBMITTED THAT TAX EFFECT INCLUDED SURCHARGE, EDUCATION CESS ETC. AND IN THIS APPEAL , TAX EFFECT IS ABOVE 10 LAKHS AND HENCE, APPEAL IS PERMISSIBLE FOR ADJUDICATION. 4 . I HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD . 5 . THE ARGUMENT ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. GUDAPATI NAGESWARA RAO IN ITA NO. 40/VIZ/2013 , BY ORDER DATED 16/06/2017 , WHEREIN THE TRIBUNAL HAS HELD THAT IF THE TAX EFFECT EXCLUDING SURCHARGE, EDUCATION CESS ETC. IS BELOW 10 LAKHS, THE REVENUE IS NOT AUTHORISED TO FILE AN APPEAL AND IF IT IS FILED, THEY SHOULD WITHDRAW THE APPEAL . THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. P. PRASEN KUMAR IN MA NO. 63/HYD/2016 ( AR I SING OUT OF ITA 3 ITA NO. 158/VIZ/2017 C.O.NO. 6 0/VIZ/2017 ( M/S. SAMEERA SOLVENT OILS PVT. LTD. ) NO. 418/HYD/2014 ) BY ORDER DATED 07/12/2016 BY FOLLOWING THE ORDER THE ORDER OF ITAT D BENCH , MUMBAI IN THE CASE OF DCIT VS. DOME BELL ELECTRONICS IN ITA NO . 2480/MUM/2012 BY ORDER DATED 22/07/2016 HAS OBSERVED AS UNDER: - 6. WE HAVE CONSIDERED THE ISSUE. AS FAR AS THE DEFINITION OF TAX IS CONCERNED, THE TAX DOES NOT I NCLUDE SURCHARGE AND CESS AS PER THE ABOVE REFERRED CASES. THE COORDINATE BENCH IN THE CASE OF DCIT VS. DOME BELL ELECTRONICS (SUPRA) HAS CONSIDERED THIS ISSUE VIDE PARA 3.2 OF ITS ORDER, WHICH IS AS UNDER: - 3.2 WE HAVE GONE THROUGH THE FACTS OF THIS CASE AND ALSO GONE THROUGH THE AFORESAID CIRCULAR AS WELL AS SUB - SECTION (43) OF SECTION 2 OF THE ACT WHICH DEFINES WORD TAX. I T IS NOTED THAT DOME BELL ELECT RONICS THE IDENTICAL ISSUE CAME UP BEFORE THE HON'BLE CHE NNAI BENCH WHEREIN THE HON'BLE BENCH HELD AS UNDER: - WE FIND THAT IN CLAUSE (4) OF INSTRUCTION NO.5 OF 2008 DATED 15 TH MAY, 2008 OF CBDT , TAX EFFECT IS DEFINED AS UNDER: - 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOT AL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREAFTER REFERRED TO AS DISPUTED ISSUES) . HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON. SIMILARLY, IN LOSS CASES NOTIONAL TAX EFFECT SHOULD NOT BE TAKEN INTO ACCOUNT. IN THE CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINS T. NOTHING HAS BEEN MENTIONED IN THE ABOVE DEFINITION TO SHOW THAT TAX WILL INCLUDE SURCHARGE FOR THE PURPOSE OF APPLYING THE SAID CIRCULAR. NOW IF WE LOOK AT T HE DEFINITION OF TAX AS PER SUB - SECTION (43) OF SECTION 2 OF INCOME TAX ACT, 1961, IT RUNS AS UNDER: - (43) TAX IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1965 , AND ANY SUBSEQUENT ASSESSMENT YEAR MEANS INCOME TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT, AND IN RELATION TO ANY OTHER ASSESSMENT YEAR INCOME - TAX AND SUPER - TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT PRIOR TO THE AFORESAID DATE [AND IN RELATIO N TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2006, AND ANY SUBSEQUENT 4 ITA NO. 158/VIZ/2017 C.O.NO. 6 0/VIZ/2017 ( M/S. SAMEERA SOLVENT OILS PVT. LTD. ) ASSESSMENT YEAR INCLUDES THE FRINGE BONE FIT TAX PAYABLE UNDER SECTION 115WA]' IT IS CLEAR THAT TAX, AS PER THE ABOVE DEFINITION, WOULD INCLUDE SUPER - TAX AND ALSO FRINGE BENEFIT TAX BUT NOT SURCHARGE. ADMI TTEDLY, HERE, THE TAX WAS ONLY 2,90,250 / - WH ICH IS BELOW THE LIMIT OF 3 LAKHS PRESCRIBED IN T HE CIRCULAR FOR FILING APPEALS BEFORE THIS TRIBUNAL. RESULTANTLY, WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THIS TRIBUNAL MUCH LESS ANY MISTAKE APPARENT ON RECORD. WE HAVE ALSO GONE THROUGH SUB - SECTION (43) OF SECTION 2 WHICH DEFINES 'TAX'. THE PERUSAL OF THE DEFINITION SHOWS THAT WHATEVER WAS INTENDED TO BE INCLUDED IN TAX HAS BEEN MENTIONED THEREIN . WHEN THE LEGISLATURE HAS MENTIONED THE WORDS SUPER - TAX AND FRINGE BENEFIT TAX', THEN, IT COULD HAVE ALSO MENTIONED THE WORDS 'SURCHARGE' AND EDUCATION CESS' AS WELL, IF THERE WAS ANY INTENTION TO INCLUDE THEM IN THE WORD 'TAX'. THUS, WE RESPECTFULLY AGREE WITH THE DECISION T AKEN BY THE CHANNEL BENCH. IN OUR VIEW, SURCHARGE AND EDUCATION CESS SHALL NOT BE INCLUDE IN WORD 'TAX' FOR THE PURPOSE OF EXAMINING OF TAX EFFECT AS ENVISAGED IN CIRCULAR OF BOARD DATED 10 TH DECEMBER 2015 NO. 21/2015. THUS, THE TAX EFFECT BEING LESS THAN 10 L AKHS, IMPUGN E D APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND THEREFORE SAME IS HEREBY DISMISSED. OUR ORDER HAS NO EFFECT ON THE MERITS OF THIS CASE.' IN VIEW OF THIS AND KEEPING IN MIND THE PRINCIPLES LAID DOWN BY THE HON'BLE DELHI HIGH COURT I N THE CASE OF DALMIA CEMENT (BHARAT) LTD., WE ARE OF THE OPINION THAT SURCHARGE AND EDUCATION CESS SHOULD NOT BE INCLUDED WHILE CALCULATING THE TAX EFFECT. SINCE THE TAX THEREON IS RS. 9 LAKHS, WHICH IS LESS THAN RS. 10 LAKHS, WE ARE OF THE OPINION THAT TH ERE IS NO MERIT IN THE MA FILED BY THE REVENUE . 6 . RESPECTFULLY FOLLOWING THE DECISION S OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF GUDAPATI NAGESWARA RAO (SUPRA) AND P. PRASEN KUMAR (SUPRA) , THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 7 . SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, LEARNED COUNSEL FOR THE ASSESSEE HAS PRAYED THAT HE MAY BE PERMITTED TO WITHDRAW THE CROSS OBJECTION. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT RAISED ANY OBJECTION. IN VIEW OF THE ABOVE , THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS WITHDRAWN . 5 ITA NO. 158/VIZ/2017 C.O.NO. 6 0/VIZ/2017 ( M/S. SAMEERA SOLVENT OILS PVT. LTD. ) 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF AUGUST , 201 7 . SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 31 ST AUGUST , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE M/S. SAMEERA SOLVENT OILS PVT. LTD., (NAME CHANGED AS KRISHNA PRABHAS AGRO OILS PVT. LTD.,) MAREDUBAKA, MANDAPETA MANDAL, E.G. DISTRICT. 2. THE REVENUE - AC IT, CIRCLE - 1, KAKINADA . 3. THE P CIT , VISAKHAPATNAM. 4. THE CIT(A) - 2 , GUNTUR . 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.