JCIT (OSD), New Delhi V. Sh. Vishal Mehta, New Delhi

ITA 2997/DEL/2011

• Counselvise Citation: 299720114 RSA 2011
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Keywords: Business income; Tax effect
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A NO. 2997/DEL/11 ASSTT. YEAR 2006-07 JCIT (OSD) CIRCLE-26(1), ROOM NO. 206-D, VIKAS BHAWAN, NEW DELHI. VS. VISHAL MEHTA M-36, VIKAS PURI NEW DELHI. ADGPM4441A (APPELLANT) (RESPONDENT) APPELLANT BY: DR. B.R.R. KUMAR, SR. DR. RESPONDENT BY: SHRI PIYUSH KAUSHIK, ADVOCATE ORDER PER DIVA SINGH, JUDICIAL MEMBER PER DIVA SINGH, JUDICIAL MEMBER PER DIVA SINGH, JUDICIAL MEMBER PER DIVA SINGH, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 22.1.2009 OF THE COMMISSIONER OF INCOME-TAX (APPEAL S)-XXIV, NEW DELHI PERTAINING TO THE ASSESSMENT YEAR 2006-07, WHEREIN THE ISSUE AGITATED BY THE REVENUE IS AS UNDER:- TREATING THE PROFESSIONAL RECEIPTS FROM M/S. LOK A DVISORY SERVICES PVT. LID. AS BUSINESS RECEIPTS BY HOLDING THAT THER E WAS NO EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE COMPANY AND THE ASSESSEE. IGNORING THE FACT THAT THE ASSESSEE WAS DIRECTOR IN THE COMPANY WHO WAS MANAGING ALL THE AFFAIRS OF THE COMPANY. IGNORING THE FACT THAT THE ASSESSEE HAD FAILED TO F URNISH THE RELEVANT DETAILS REGARDING THE EXACT NATURE OF WORK AND THE VARIOUS PROJECTS UNDERTAKEN BY HIM IN SUPPORT OF HIS CONTENTION THAT THERE WAS NO CONTROL OR SUPERVISION OF HIS WORK. DIRECTING THE AO TO TREAT THE RECEIPTS AS BUSINESS RECEIPTS AND ALLOW THE EXPENSES CLAIMED IN THE P & L ACCOUNT. 2. HOWEVER RIGHT AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT THE DEPARTMENTAL APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF THE FACT THAT THE ITA NO. 2997/DEL/11 ASSTT. YEAR 2006-07 2 TAX EFFECT INCLUDING SURCHARGE AMOUNTS TO RS. 2,50, 119/-WHICH IS MUCH BELOW THE MONETARY LIMIT AS HAS BEEN FIXED BY THE C BDT VIDE ITS CIRCULAR NO. 3/2011 DATED 9 TH FEBRUARY, 2011. 3. APART FROM RELYING UPON CBDT INSTRUCTION NO. 3/2 011 DATED 9 TH FEBRUARY, 2011 COPY OF WHICH WAS PLACED BEFORE THE BENCH, RELIANCE WAS ALSO PLACED UPON THE FOLLOWING JUDGMENTS :- I. COMMISSIONER OF INCOME-TAX V. INFO VERGIX TECHNO LOGIES LIMITED (2010) 323 ITR 52 (DEL. HIGH COURT); II. CIT VS. PRADEEP KUMAR GUPTA (2007) 207 CTR (DEL ) 115 (DEL. HIGH COURT); III. ACIT VS SATISH CHAND JAIN 10 SOT 383 (DEL.); IV. ACIT VS. DOON VALLEY MOTORS 10 SOT 525 (DEL.); V. RECENT DECISION OF DELHI ITAT IN THE CASE OF DCI T VS. JJ IMPORTS PVT. LTD. DATED 05.05.11 IN ITA NO. 4717/DEL/09-COP Y ENCLOSED AT PAGES 6-8. 4. LD. DR IN REGARD TO THE AMOUNT INVOLVED IN THE D EPARTMENTAL APPEAL STATED THAT THERE IS NO MISTAKE AND THE CALCULATION IS CORRECT. THE AMOUNT INVOLVED IS BELOW THE MONETARY LIMIT. 5. IT IS SEEN THAT THE INSTRUCTION NO.3/2011 OF 9 TH FEBRUARY, 2011 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) FIXES T HE MONETARY LIMIT FOR FILING THE APPEAL IN THE INCOME-TAX MATTERS BEFORE THE TRIBUNAL AT RS.3,00,000/-, ADMITTEDLY THE AMOUNT IS MUCH BELOW THIS LIMIT. IT IS ALSO SEEN THAT QUA THE ABOVE MENTIONED CBDT INSTRUCTION CO-ORDINATE BENCHES CONSISTENTLY FOLLOWING THE JUDGMENT OF THE JURISDIC TIONAL HIGH COURT HAVE BEEN UNANIMOUSLY DISMISSING DEPARTMENTAL APPEALS. A S PER REVISED INSTRUCTION OF THE CBDT NO.3 DATED 9.2.2011 WHEREIN THE CBDT HAS REVISED THE FILING LIMITS FOR APPEAL FILED BEFORE T HE TRIBUNAL, HIGH COURT AND SUPREME COURT, THEY ARE AS UNDER:- BEFORE THE INCOME TAX APPELLATE TRIBUNAL: RS.3 LAK HS, APPEALS U/S 260A OF THE IT ACT BEFORE THE HONBLE HIGH COURT : RS.10 LAKHS AND BEFORE THE HONBLE SUPREME COURT : RS.25 LAKHS ITA NO. 2997/DEL/11 ASSTT. YEAR 2006-07 3 REFERENCE MAY BE MADE TO THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA 128/2008 DAT ED 3 RD MARCH, 2011 WHICH HAS HELD AS UNDER :- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4,65,860/- .AS PER RECENT GUIDELINES OF THE CBDT, APPEAL IN TH OSE CASES WHERE THE TAX EFFECT IS LESS THAN 10 LACS, ARE NOT BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X-III V. M/S. P.S. JAIN AND CO. BEING NO.179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WO ULD ALSO APPLY TO PENDING CASES. 6. IDENTICAL VIEW HAS BEEN TAKEN IN THE FOLLOWING O RDERS (1) ORDER OF ITAT, MUMBAI BENCH `A MUMBAI IN THE C ASE OF ITO VS. SHRI ASHOK G. DHANDHARIAI IN ITA NO.2460/MUM./2010, DATED 28 TH FEBRUARY, 2011, FOR THE ASSESSMENT YEAR 2005-06; & (2) ORDER OF ITAT, DELHI BENCH `F NEW DELHI IN THE CASE OF ITO VS. M/S. PRS SECURITIES PVT. LTD. IN ITA NO.4447/2010, DATED 25.03.2011 FOR THE ASSESSMENT YEAR 2001-02. 7. WE FURTHER FIND THAT IT IS A SETTLED LAW THAT TH E CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS V S. INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN TH EIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WI TH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CI RCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUN D BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAI NLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT INSTRUCTION NO.3 DATED 9.2.2011. 8. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FI LED BY THE DEPARTMENT AGAINST THE IMPUGNED ORDER OF THE LD. CI T(A), IS CONTRARY TO THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH T HE APPEAL FILED BY THE DEPARTMENT IS DISMISSED IN LIMINE . ITA NO. 2997/DEL/11 ASSTT. YEAR 2006-07 4 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING ITSELF I.E. ON 10 TH AUGUST, 2011. SD/- SD/- [B.K. HALDAR] [DIVA SINGH] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH AUGUST, 2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT