Assistant Commissioner of Income-tax, V. M/s. Rajesh Traders, Kolhapur

ITA 217/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4328 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Business income; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 217/PUN/2016 $ $ / ASSESSMENT YEAR : 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOLHAPUR ....... / APPELLANT / V/S. M/S. RAJESH TRADERS, PLOT NO.13, E-WARD, CHHATRAPATI SHAHU MARKET YARD, ONION POTATO MARKET, KOLHAPUR 416 001 PAN : AAHFR6309J / RESPONDENT APPELLANT BY : SHRI MUKESH JHA RESPONDENT BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 26.07.2018 / DATE OF PRONOUNCEMENT : 01.08.2018 / ORDER PER D. KARUNAKARA RAO, AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF C IT(A)-2, KOLHAPUR, DATED 15-12-2015 FOR THE A.Y. 2011-12. 2. GROUNDS RAISED BY THE REVENUE ARE EXTRACTED BELOW : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE B Y THE AO OUT OF DEDUCTION U/S.40(B) OF THE I.T. ACT, 1961 OF RS.48,38,949/- H AVING TAX EFFECT OF RS.14,95,235/- CLAIMED AS REMUNERATION TO PARTNER ON THE AMOUNT OF ADDITIONAL INCOME DECLARED DURING SURVEY OPERATION. 2 ITA NO.217/PUN/2016 M/S. RAJESH TRADERS 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) IS NOT JUSTIFIED IN IGNORING THAT THE ADD ITIONAL INCOME DECLARED DURING THE SURVEY CANNOT BE TREATED AS BUSINESS INCOME ELI GIBLE FOR DEDUCTION U/S.40(B) OF THE I.T. ACT, 1961 AND HENCE ERRED IN ALLOWING ASSESSEES APPEAL ON THIS GROUND. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT (A)-2, KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICERS ORDER M AY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY THE ABOVE GROUNDS RAISED, ANY OTHER GROUNDS AT THE TIME OF PR OCEEDINGS BEFORE THE HONBLE TRIBUNAL WHICH MAY PLEASE BE GRANTED. 3. AT THE OUTSET, LD. AR FOR THE ASSESSEE SUBMITTED THA T THE APPEAL FILED BY THE DEPARTMENT IS LIABLE TO BE DISMISSED ON ACCOUNT O F LOW TAX EFFECT. THE LD. AR POINTED THAT AS PER CBDT CIRCULAR NO.3/2018 DATE D 11 TH JULY, 2018, THE MONETARY LIMIT FOR FILING OF APPEAL BY THE DEPARTMENT BEFO RE THE TRIBUNAL IS RS.20 LAKHS, THEREFORE, THE APPEAL FILED BY THE DEPARTME NT IS NOT MAINTAINABLE. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE DEFENDE D THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS O F THE CIT(A). HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE TAX EFFECT IN THE PRESENT APPEAL IS LESS THAN RS.20 LAKHS. 5. BOTH SIDES HEARD. ON PERUSAL OF THE FACTS OF THE CASE , WE FIND THIS IS A CASE WHERE AO DISALLOWED RS.48,38,949/- ON ACCOUNT OF REM UNERATION PAID TO PARTNERS U/S.40B OF THE ACT AND THE CIT(A) CONFIRMED T HE SAID ADDITION MADE BY THE AO. HOWEVER, AS MENTIONED BY BOTH THE RE PRESENTATIVES, THE TOTAL TAX EFFECT INVOLVED IN THE PRESENT APPEAL WORKS OUT TO RS.14,95,235/-. THE CBDT CIRCULAR NO.3/2018 DATED 11 TH JULY, 2018 RAISED THE MONETARY LIMIT OF TAX EFFECT FOR FILING OF APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL TO RS.20 LAKHS. THE CIRCULAR APPLIES TO THE PENDING APPEALS OF THE DEPARTMENT BEFORE THE TRIBUNAL TOO. THUS, IN VIEW OF THE CBDT CIRCULAR, WE ARE OF THE 3 ITA NO.217/PUN/2016 M/S. RAJESH TRADERS OPINION THAT THE PRESENT APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT WITHOUT GOING INTO THE MERITS OF THE CASE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 01 ST DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 01 ST AUGUST, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, KOLHAPUR 4. THE CIT(CENTRAL), PUNE 5. , , ' , / DR, ITAT, B BENCH, PUNE. 6. % / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.