ACIT, Gurgaon V. M/s Honda Motorcycle and Scooter India Pvt. Ltd., Gurgaon

ITA 3238/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1825 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: AMI T SHRIVASTAVA
• Keywords: Audit objection; Retrospective amendment; Tax effect
• Section: 12A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. H.S.SIDHU, JM AND SH. PRASHANT MAHARISHI, AM ITA NO. 3238/DEL/201 1 : ASSTT. YEAR : 2004-05 A CI T GURGAON RANGE GURGAON VS HONDA MOTORCYCLE AND SCOOTER INDIA PVT. LTD. PLOT NO. 1, SECTOR 3, GURGAON (APPELLANT) (RESPONDENT) PAN NO. AAACH7467D APPELLANT BY : SH. T. VAS ANTHAN, SR. DR RESPONDENT BY : SH. AMI T SHRIVASTAVA, ADV. DATE OF HEARING : 21.12.2015 DATE OF PRONOUNCEME NT : 21. 12.2015 ORDER PER PRASHANT MAHARISHI, AM: 1. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER DATED 16.03.2011 OF CIT(A) PANCHKULA AGAINST THE DELETION OF DISAL LOWANCE OF RS 1,70,96,000/- ON ACCOUNT OF SALES TOOLS EXPENSES. FURTHER ORDER U/S 154 OF THE ACT PASSED BY AO ON 24.03.2009, WHEREIN HE H AS RECTIFIED THE FIGURE OF RS 1,70,96,000/- AS RS 4,86,000/-. THERE FORE LD DR SUBMITTED THAT THE GROUND OF APPEAL OF THE REVENUE NOW STANDS CORRECTED BY SUBSTITUTION OF FIGURE OF RS 4,86,000/- INSTEAD OF RS 1,70,96,000/-. 2. ON BEHALF OF THE ASSESSEE, LD AR SUBMITTED THAT ON SUBSTITUTION OF THE FIGURE OF RS 4,86,000/- AGAINST RS 1,70,96,000/- NO W THE TAX EFFECT IN APPEAL OF REVENUE IS LESS THAN RS 10,00,000/- AND T HERFORE SAME MAY BE DISMISSED ON THAT GROUND. 3. LD DR AGREED TO THE FACTS THAT NOW THE QUANTUM I N GROUNDS OF APPEAL OF THE REVENUE IS ONLY RS 4,86,000/- AND THEREFORE TAX EFFECT IS LESS THAN RS 10,00,000/-. DURING THE COURSE OF HEARING, THE L D. D.R., ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF RIVAL PARTIE S. WE ARE OF THE VIEW THAT AS PER THE INSTRUCTIONS OF THE CBDT TO THE DEP ARTMENT, WHEREIN IT IS ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 2 CLEARLY MENTIONED THAT THE CIRCULAR NO. 21/2015 IS APPLICABLE RETROSPECTIVELY AND THE APPEALS OF THE DEPARTMENT, WHEREIN TAX EFFECT IS LESS THAN RS. 10 LACS SHOULD BE WITHDRAWN OR NOT PR ESSED. IT IS NOTICED THAT SECTION 268A HAS BEEN INSERTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/99. THE PROVISIONS CONTAINED IN SECTION 268A READ AS UNDER: 268A. (1) THE BOARD MAY, FROM TIME TO TIME, ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO OTHER INCOME- TAX AUTHORITIES, FIXING SUCH MONETARY LIMITS AS IT MAY DEEM FIT, FOR THE PURPOSE OF REGULATING FILING OF APPEAL OR APPLICATION FOR REFERENCE BY ANY INCOME-TAX AUTHORI TY UNDER THE PROVISIONS OF THIS CHAPTER. (2) WHERE, IN PURSUANCE OF THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1), AN INCOME- TAX AUTHORITY HAS NOT FILED ANY APPEAL OR APPLICATION F OR REFERENCE ON ANY ISSUE IN THE CASE OF AN ASSESSEE F OR ANY ASSESSMENT YEAR, IT SHALL NOT PRECLUDE SUCH AUTHORI TY FROM FILING AN APPEAL OR APPLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF (A) THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR; OR (B) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR. (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION F OR REFERENCE HAS BEEN FILED BY AN INCOME-TAX AUTHORITY PURSUANT TO THE ORDERS OR INSTRUCTIONS OR DIRECTION S ISSUED UNDER SUB-SECTION (1), IT SHALL NOT BE LAWFU L FOR AN ASSESSEE, BEING A PARTY IN ANY APPEAL OR REFEREN CE, TO CONTEND THAT THE INCOME-TAX AUTHORITY HAS ACQUIESCE D IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENCE IN ANY CASE. (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDER S, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NOT FILED IN RESPECT OF ANY CASE. (5) EVERY ORDER, INSTRUCTION OR DIRECTION WHICH HAS BEEN ISSUED BY THE BOARD FIXING MONETARY LIMITS FOR FILI NG AN APPEAL OR APPLICATION FOR REFERENCE SHALL BE DEEMED TO HAVE BEEN ISSUED UNDER SUB-SECTION (1) AND THE ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 3 PROVISIONS OF SUB-SECTIONS (2), (3) AND (4) SHALL A PPLY ACCORDINGLY.] 5. IT IS NOT IN DISPUTE THAT THE BOARDS INSTRUCTION O R DIRECTIONS ISSUED TO THE OTHER INCOME-TAX AUTHORITIES ARE BINDING ON THOSE A UTHORITIES, THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL I N VIEW OF THE ABOVE MENTIONED SECTION 268A SINCE THE TAX EFFECT IN THE INSTANT CASE IS LESS THAN THE AMOUNT PRESCRIBED FOR NOT FILING THE APPEA L. 6. IT IS NOTICED THAT THE CBDT HAS ISSUED CIRCULAR NO. 21 OF 2015-DATED 10.12.2015, VIDE WHICH IT HAS REVISED THE MONETARY LIMIT TO RS.10,00,000/- FOR NOT FILING THE APPEAL BEFORE TH E TRIBUNAL. THE SAID CIRCULAR READ AS UNDER: SUBJECT : REVISION OF MONETARY LIMITS FOR FI LING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPEL LATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE SUPREME COU RT MEASURES FOR REDUCING LITIGATION REG. REFERENCE IS INVITED TO BOARDS INSTRUCTION NO 5/20 14 DATED 10.07.2014 WHEREIN MONETARY LIMITS AND OTHER CONDIT IONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE T HE 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 BEFORE APPELLATE TRIBUNAL AND HIGH COURTS AN D SLP BEFORE THE SUPREME COURT KEEPING IN VIEW THE MONETA RY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY L IMITS GIVEN HEREUNDER: S. NO APPEALS IN INCOME - TAX MATTER MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 10,00,000/- 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 LIMIT S PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECI DED ON MERITS OF THE CASE. ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 4 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND TH E TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BE EN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE I SSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREI NAFTER REFERRED TO AS DISPUTED ISSUES). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEAB ILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEAB ILITY 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 TA X ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFEC T 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 IN THE CASE OF EVERY ASSESSEE. IF, IN THE CA SE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ON E ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSES SMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DIS PUTED 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 SPECIFIE D IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS 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 C OURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE A SSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESS MENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBE D MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO F ILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEED S THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/ JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHAL L 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 L ESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY RECORD THAT EVEN THOUGH THE DEC ISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE C ONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION. FURTHER, IN SUCH CASES, THERE WI LL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQU IESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINS T THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FO R ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESS EE FOR THE ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 5 SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFEC T EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIME D RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND T HAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE S AME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON T HE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/C OUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF TH E TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FIL ED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEIN G LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFEREN CE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCE PTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UP ON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE A NY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPE AL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 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 SP ECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (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 BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN 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. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER, FILING OF APPEAL IN CASES OF INCOME TAX, W HERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTIO N 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPEC IFIED IN PARA 3 ABOVE AND DECISION TO FILE APPEAL 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 ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 6 PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTI ONS 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. 7. FROM CLAUSE 10 OF THE ABOVE CIRCULAR IT IS CLEAR TH AT THESE INSTRUCTIONS ARE APPLICABLE TO THE PENDING APPEALS ALSO AND THER E IS CLEAR CUT INSTRUCTION TO THE DEPARTMENT TO WITHDRAW OR NOT TO PRESS THE APPEALS FILED BEFORE THE ITAT WHEREIN TAX EFFECT IS LESS TH AN RS.10,00,000/-. THESE INSTRUCTIONS ARE OPERATIVE RETROSPECTIVELY TO THE PENDING APPEALS. 8. KEEPING IN VIEW THE CBDT CIRCULAR NO.21 OF 2015-DAT ED 10.12.2015 AND THE PROVISIONS OF SECTION 268A OF INCOME TAX ACT, 1 961, WE ARE OF THE VIEW THAT THE REVENUE SHOULD NOT HAVE FILED THE INS TANT APPEAL BEFORE THE TRIBUNAL. 9. IN VIEW OF THE ABOVE, WITHOUT GOING INTO MERITS OF THE CASE, WE DISMISS THE APPEAL FILED BY THE DEPARTMENT. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 21.12.2015 ) SD/- SD/- (H.S.SIDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 21 /12/2015 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 3238/DEL/2011 HONDA MOTORCYCLE AND SCO OTER INDIA PVT. LTD. 7 DATE INITIAL 1. DRAFT DICTATED ON 21 /1 2 /2015 2. DRAFT PLACED BEFORE AUTHOR 21 /1 2 /2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.