ITO, Kannur V. M/s.Rajeswari Hospital, Kannur

ITA 202/COCH/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8657 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 01-03-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 08-05-2014
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Keywords: Audit objection; Tax effect
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI GEORGE GEORGE K., JM & B.R. BASKA RAN, AM I.T.A. NO. 202/COCH/2014 (ASSESSMENT YEAR : 1996-97) THE INCOME TAX OFFICER, WARD-1, KANNUR. VS. M/S. RAJESWARI HOSPITAL, TALAP, KANNUR. [PAN: AAHER 6820J] (REVENUE -APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI K.P.GOPAKUMAR, SR. DR ASSESSEE BY NONE DATE OF HEARING 26/04/2016 DATE OF PRONOUNCEMENT 26/04/2016 O R D E R PER GEORGE GEORGE K., JM THIS APPEAL BY THE REVENUE ARISES FROM THE ORDER OF THE LD. CIT(A) , KOZHIKODE DATED 05-02-2014 FOR THE ASSESSMENT YEAR 1996-97. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPIT E OF VALID SERVICE OF NOTICE. THEREFORE, WE PROCEED TO DECIDE THE ISSUE EX-PARTE, AFTER HEARING THE LD. DR AND MATERIAL AVAILABLE ON RECORD. I.T.A. NO. 202/COCH/2014 2 3. AT THE VERY OUTSET, IT WAS NOTICED THAT THE TAX EFFECT IN THE PRESENT CASE IS BELOW RS.10 LAKHS. THE LATEST CBDT CIRCULAR NO. 21/2015 DATED 10 TH DECEMBER, 2015, STATES THAT THE APPEAL OF THE DEPAR TMENT IS NOT MAINTAINABLE IN VIEW OF THE TAX EFFECT BEING LESS T HAN THE MONETARY LIMIT PRESCRIBED BY THE SAID CIRCULAR. THE TAX EFFECT IN FILING THE APPEAL BEFORE THE TRIBUNAL SHOULD BE ABOVE RS.10 LAKHS IN VIEW OF THE ABOVE SAID CIRCULAR. THE ABOVE CIRCULAR HAS CLEARLY MENTIONED TO HAVE RE TROSPECTIVE EFFECT AND IS TO HAVE APPLICATION TO THE PENDING APPEALS. THE REL EVANT EXTRACTS OF THE CBDT CIRCULAR IN ITS FULL IS REPRODUCED BELOW FOR R EADY REFERENCE: F NO 279/MISC. 142/2007-ITJ ( PT) CIRCULAR NO. 21/2015 GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD DIRECT TAXES NEW DELHI THE 10TH DECEMBER, 2015 SUBJECT: REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURT S AND SLP BEFORE SUPREME COURT - MEASURES FOR REDUCING LITIGATION - REG - REFERENCE IS INVITED TO BOARD'S INSTRUCTION NO 5/20 14 DATED 10.07.2014 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEP ARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL AND H IGH COURTS AND SLP BEFORE THE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BE FORE APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE THE SUPREME COURT KEEPIN G IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. I.T.A. NO. 202/COCH/2014 3 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - SL. NO. APPEALS IN INCOME TAX MATTERS MONETARY LIMIT (IN RS.) 1. BEFORE APPELLATE TRIBUNAL 10,00,00/- 2. BEFORE HIGH COURT 20,00,000/ 3. BEFORE SUPREME COURT - 25,00,000/- 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 B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER THE TAX WILL NOT INCLUDE ANY INTE REST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY 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. I N CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES I N THE CASE OF EVERY ASSESSEE. LF, IN THE CASE OF AN ASSESSEE, THE DISPU TED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPEC T OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, AP PEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSM ENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AU THORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT O F ALL SUCH ASSESSMENT YEARS I.T.A. NO. 202/COCH/2014 4 EVEN IF THE 'TAX EFFECT' IS LESS THAN THE PRESCRIBE D MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN C ASE WHERE A COMPOSITE ORDER/ JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, E ACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A CO URT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONET ARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY R ECORD THAT 'EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FIL ED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION'. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTIO N THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM F ILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSE E FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPEC IFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRI BUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEP TED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR A NY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR A NY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES . THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEIN G LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CA SES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPE AL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOL DERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RE TRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSU ES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE I.T.A. NO. 202/COCH/2014 5 (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREI GN ASSETS/ BANK ACCOUNTS. 9. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SH ALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILIN G OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVA NT PROVISIONS OF STATUTE & RULES. FURTHER, FILING OF APPEAL IN CASES OF INCOME TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS U/S. 12A OF THE IT ACT, 1961, SHALL NO T BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPE AL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRA WN/ NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED B Y THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 11. THIS ISSUES UNDER SECTION 268A (1) OF THE INCOM E-TAX ACT 1961. SD/- ( D.S. CHAUDHRY) CIT(A&J), CBDT, NEW DELHI 4. ACCORDINGLY, IN VIEW OF THE SAID CIRCULAR, APP EAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE, SINCE THE TAX EFFECT IN THE INSTANT CASE IS BELOW THE MONETARY LIMIT PRESCRIBED. IT IS ORDERED ACCORDINGLY. I.T.A. NO. 202/COCH/2014 6 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-04-2016. SD/- SD/- (B.R. BASKARAN)) (GEORGE GEORGE ) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 26 TH APRIL, 2016 GJ COPY TO: 1. M/S. RAJESWARI HOSPITAL, TALAP, KANNUR. 2. INCOME TAX OFFICER, WARD-1, KANNUR. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKOD E. 4.THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN