DCIT, CHENNAI V. M/s. Elsytec Power Projects Pvt Ltd., CHENNAI

ITA 1683/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1019 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-02-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: MRS SUMITHRA RAVICHANDRAN
• Keywords: Audit objection; Tax effect

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI B BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GEORGE, A.M. I.T.A. NO.1683/MDS/2010 ASSESSMENT YEAR: 2003-04 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(1), CHENNAI 600 034. VS. M/S. ELSYTEC POWER PROJECTS PVT. LTD., 12/1, 57 TH STREET, ASHOK NAGAR, CHENNAI 600 095. [PAN:AAACE2024K] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.B. SEKARAN ASSESSEE BY : MRS. SUMITHRA RAVICHANDRAN ORDER PER U.B.S. BEDI, J.M . THIS APPEAL OF THE DEPARTM ENT IS DIRECTED AGAINST T HE ORDER PASSED BY THE LD. CIT(A) III, CHENNAI DATED 29.07.2010 RELEVANT TO T HE ASSESSMENT YEAR 2003-04, WHEREBY THE ACTION OF THE LD. CIT(A) IN REDUCING THE EXPENSES AT THE RATE OF 10% ON GROSS RECEIPT TO ALLOW DEDUCTION UNDER SE CTION 80-O AND TO ALLOW REMUNERATION OF ` .1.50 LAKHS PAID TO THE DIRECTOR HAS BEEN CHALLENGED. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IN THIS CASE IN RELATION TO THE GROUNDS RAISED IS LESS THAN ` .2.00 LAKHS, IN VIEW OF THE LATEST DECISION OF CBDT AND VARIOUS DECISIONS OF MADRAS HIGH COURT FOLLOWED BY THE CHENNAI BENCHES, T HE APPEAL OF THE DEPARTMENT IS NOT MAINTAINABLE, WHICH MAY BE DISMISSED. 3. THE LD. DR STRONGLY PL EADED THAT THESE POINTS HAVE B EEN RAISED IN THE APPEAL OF THE DEPARTMENT AS THERE WA S AN AUDIT OBJECTION IN RELATION TO THIS GROUND IN EARLIER YEAR, SO THE CASE OF THE ASSESSEE FALL S WITHIN THE EXCEPTI ON PROVIDED IN THE I.T.A. NO.1683/MDS/10 2 GOVERNMENT CIRCULAR/INSTRUCTION REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE AND WHEN IT WAS SPECIFICAL LY ASKED, IF THERE IS ANY AUDIT OBJECTION FOR THE YEAR UNDER CONSIDERATION, HE COULD NOT GIVE ANY SATISFACTO RY REPLY BUT INSISTED THAT IN VIEW OF THE AUDIT OBJECTION IN THE EARLIER YEAR AND WHEN THE APPEAL HAS BEEN FILED BY THE DEPARTMENT, IT SHOULD BE CONSIDERED AND DECIDED ON MERITS. 4. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE TAX EFFECT IN THIS CASES IS BELOW RS.2,00,000/-, FIXED BY THE CENTRAL BOARD OF DIRECT TAXES FOR FILING APPEALS BEFORE INCOME TAX APPELLATE TRIBUNAL VIDE INSTRUCTION NO.2 OF 2005 DATED 24 TH OCTOBER, 2005 AND SUBSEQUENT INSTRUCTION. THE REVENUE HAS NOT MADE OUT A CASE TO ESTABLISH THAT THE ISSUE FALLS WITHIN THE EXCEPTIONS PROVIDED IN THE SAID CIRCU LAR/ INSTRUCTION. 5. FURTHER IN THE CASE OF CIT V. ASSO CIATED AGENCIES, CHENNAI-600 034 REPORTED IN 295 ITR 496, THE HONBLE MADRAS HIG H COURT HAS HELD THAT APPEALS CANNOT BE FILED IN VIOLATION OF THE SAID CIRCULAR. THE HONBLE MADRAS HIGH COURT HAD ALSO REFERRED TO THE JUDGMENT OF HONBLE MADHYA PRADESH HIGH C OURT IN THE CASE OF CIT VS. DIGVIJAY SINGH REPORTED IN (2007) 292 IT R 314, THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ZOEB Y. TOPIWALS (2006) 284 ITR 379 AND ALSO ANOTHER JUDGMENT OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CAMCO COLOUR CO., (2002) 254 ITR 565 FOR THE PROPOS ITION THAT DIRECTIONS ISSUED BY THE BOARD ARE BINDING ON THE DEPARTMENT AND APPEAL FILE D WHERE THE TAX EFFECT IS LESS THAN THAT PROVIDED IN THE SAID IN STRUCTION IS NOT MAINTAINABLE. I.T.A. NO.1683/MDS/10 3 6. HENCE, IN VIEW OF THE SAID CIRC ULAR AND RESPECTFULLY FOLLOWING THE PRECEDENTS FROM HONBLE JURISDICTIONAL HIGH COURT AS NOTED ABOVE, THE APPEAL IS DISMISSED IN LIMINE. 7. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN T HE OPEN COURT ON 25.02.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 25.02.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.