Income Tax Officer, Hubli V. M/s.Vasavi Seva Sangh, Hubli

ITA 385/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5493 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Audit objection; Maximum Marginal Rate; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH - SMC C BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER I.T.A. NO. 385 /BANG/201 7 (ASSESSMENT YEAR : 20 13 - 14 ) INCOME TAX OFFICER, WARD 3(5), HUBLI. VS. VASAVI SEVA SANGH, BAILAPPANAVAR NAGAR, HUBLI. PA N AAAAV 3776B APPELLANT RESPONDENT. APPELLANT BY : SHRI AR.V.SREENIVASAN, JCIT (D.R) RESPONDENT BY : NONE. DATE OF H EARING : 23.03.2017. DATE OF P RONOUNCEMENT : 21 .04. 201 7 . O R D E R PER SHRI VIJAY P AL RAO, J. M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DT. 30.11.2016 OF COMMISSIONER OF INCOME TAX (APPEALS) , HUBLI FOR THE ASSESSM ENT YEAR 2013 - 14 . 2. THE REVENUE HAS RAISE D THE FOLLOWING GROUNDS : WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE LEARNED CIT (APPEALS) IS CORRECT IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE BUSINESS INCOME OF AOP OF RS.21,61,725 AND TAX IT IN THE MANNER AS 2 ITA NO. 385 /BANG/ 2017 INDL./HUF AS BUSINESS INCOME, EVEN THOUGH THE SECTION 164(1) OF THE IT ACT, 1961 CLEARLY STATES THAT WHERE THE SHARE OF BENEFICIARIES OR ANY PART THEREOF IS NOT SPECIFICALLY RECEIVABLE ON BEHALF OR FOR THE BENEFIT OF ANY ONE WHOSE BENEFIT SU CH INCOME OR SUCH PART THEREOF IS RECEIVABLE OR INDETERMINATE OR UNKNOWN, THE TAX SHALL BE CHARGED IN THE RELEVANT INCOME OR PART OF RELEVANT INCOME AT THE MAXIMUM MARGINAL RATE. 3. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. SINCE THIS APPEAL BY T HE REVENUE IS NOT MAINTAINABLE BECAUSE OF THE LOW TAX EFFECT THEREFORE IT IS PROPOSED TO HEAR AND DISPOSE OF EXPARTE. 4. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, THE LEARNED DE PARTMENTAL REPRESENTATIVE HAS POINTED OUT THAT THE TAX EFFECT IN THIS APPEAL BY THE REVENUE IS ONLY RS.1,16,297 WHICH IS MUCH BELOW THE LIMIT PRESCRIBED AS PER CBDT CIRCULAR NO.21/2015 DT. 10.12.2015. HOWEVER LD DR STATED THAT EXISTENCE OR NOT OF ANY RE VENUE AUDIT OBJECTIONS LEADING TO THE FILING OF THE APPEAL NEEDED TO BE ASCERTAINED. 5. I HAVE PERUSED THE ORDERS AND HEARD THE CONTENTIONS. PARAS 3, 4 & 10 OF THE CIRCULAR NO.21/2015 (SUPRA) IS REPRODUCED HEREUNDER : 3. HENCEFORTH, APPEALS/SLPS SHALL N OT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: 3 ITA NO. 385 /BANG/ 2017 S.NO. APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT (IN RS.) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/ - 2. BEFORE HIGH COURT 20,00,000/ - 3. BEFORE SUPREME CO URT 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 DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER RE FERRED TO AS DISPUTED ISSUES ). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST 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 TA X EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALE D AGAINST. 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 WITHDRAWN/ NOT PRESSED. APPEALS BEFORE THE SUP REME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 4 ITA NO. 385 /BANG/ 2017 6. THE TAX EFFECT ON THE ISSUES AND / OR THE PENALTY THAT IS DISPUTED IN EACH APPEAL BY THE REVENUE IS LESS THAN RS.10 LAKHS FOR THE IMPUGN ED ASSESSMENT YEARS. NEITHER THE CONSTITUTIONAL VALIDITY OF ANY PROVISIONS OF THE ACT OR RULES NOR THE LEGALITY OR VIRES OF ANY BOARD ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR WAS AN ISSUE BEFORE THE LOWER AUTHORITIES. REVENUE HAS NOT BROUGHT TO OUR N OTICE ANYTHING TO SHOW THAT THE APPEAL AROSE ON AN ISSUE EMANATING FROM ANY REVENUE AUDIT OBJECTIONS ACCEPTED BY THE DEPARTMENT. ADDITION GIVING RISE TO THE APPEALS DOES NOT RELATE TO ANY UNDISCLOSED FOREIGN ASSETS / BANK ACCOUNTS. THUS I FIND THAT TH E CIRCULAR NO.21/ 2015 (SUPRA) IS SQUARELY APPLICABLE IN THIS CASE. HOWEVER IF REVENUE, AT A LATER STAGE FIND THAT APPEAL ARISE OUT OF ISSUES EMANATING FROM AUDIT OBJECTION IT WILL BE FREE TO FILE MP FOR RECALLING THIS ORDER. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 201 7 . SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DT. 21 .04 .2017. *REDDY GP 5 ITA NO. 385 /BANG/ 2017 COPY TO : 1 . APPELLANT 2 . RESPONDENT 3 . C.I.T. 4 . CIT(A) 5 . DR, ITAT, BANGALORE. 6 . GUARD FILE. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.