THE ACIT 13(3), MUMBAI V. M/S. ADITYA AGARWAL, MUMBAI

ITA 5654/MUM/2008

• Counselvise Citation: 565419914 RSA 2008
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Business income; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A : MUMBAI BEFORE SHRI D.K. AGARWAL, ( JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.5654/MUM/2008 ASSESSMENT YEAR : 2005-06 THE ACIT -13(3) ROOM NO.430, 4 TH FLOOR AAYAKAR BHAVAN, MK ROAD NEW MARINE LINES MUMBAI-400 020. ..( APPELLANT ) VS. SHRI ADITYA AGARWAL 401, VYAPAR BHAVAN 368/370, NARSI NATHA STREET MASJID (W) MUMBAI-400 009. ..( RESPONDENT ) P.A. NO. (AAAPA 8348 P) APPELLANT BY : SHRI SHANTAM BOSE RESPONDENT BY : SHRI VI JAY MEHTA DATE OF HEARING : 27.10.2011. DATE OF PRONOUNCEMENT : 27 TH OCTOBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.6.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06 . THE REVENUE HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS WHICH RELA TE TO TREATMENT OF SHARE TRANSACTION LOSS OF RS.20,68,801/- AS CAPITAL GAIN AND DELETION OF ADDITION OF RS.3,07,630/- BY CIT(A) ON ACCOUNT OF LOW DRAWINGS. ITA NO. 5654/M/08 A.Y:05-06 2 2. THE LD. AR FOR THE ASSESSEE AT THE OUTSET POINTE D OUT THAT TAX EFFECT IN THIS CASE WAS NEGATIVE AND THEREFORE LESS THAN RS.3 .00 LACS. IT WAS POINTED OUT THAT TOTAL INCOME AFTER TREATING THE LOSS OF RS .20,68,801/- AS BUSINESS LOSS BY THE AO AND AFTER MAKING ADDITION OF RS.3,07 ,630/- ON ACCOUNT OF LOW DRAWINGS WAS RS.23,11,47,647/- AND TAX ON THE SAID INCOME WAS RS.6,93,21,894/-. HOWEVER, AFTER TREATMENT OF LOSS OF RS.20,68,801/- AS CAPITAL LOSS AND AFTER DELETION OF ADDITION ON ACCO UNT OF DRAWINGS TOTAL INCOME WAS RS.6,98,46,646/- AS CAPITAL LOSS COULD NOT BE S ET OFF AGAINST BUSINESS INCOME AND HAD TO BE CARRIED FORWARD. THUS TAX EFF ECT AFTER ORDER OF CIT(A) WAS (-)5,24,752/-. IT WAS ALSO POINTED OUT THAT EV EN IF NOTIONAL TAX EFFECT ON CARRIED FORWARD CAPITAL LOSS @ 10% WAS CONSIDERED A MOUNTING TO RS.2,03,564/-, THE TAX EFFECT WAS (-)RS.3,21,188/-. THUS ORDER OF CIT(A) HAS RESULTED TAX GAIN TO THE REVENUE, ITS EFFECT BEING MINUS. THEREFORE IN VIEW OF THE CIRCULAR OF THE CBDT, REVENUE AUTHORITIES ARE N OT PERMITTED TO PURSUE THE APPEAL BEFORE THE TRIBUNAL . THE LD. AR PLACED ON R ECORD THE COMPARATIVE TAX COMPUTATION WHICH WAS ALSO PERUSED BY THE LD. DR WH O COULD NOT POINT OUT ANY MISTAKE IN THE COMPUTATION. 3. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE TAX EFFECT IN THIS CASE IS LESS THAN RS.3.00 LACS W HICH IS ADMITTED BY BOTH THE PARTIES. AS PER CBDT INSTRUCTION NO.2 DATED 24.10. 2005 THE REVENUE AUTHORITIES ARE NOT AUTHORIZED TO FILE APPEAL BEFOR E THE TRIBUNAL IN CASE TAX EFFECT IS LESS THAN RS.2.00 LACS. THE SAID LIMIT W AS RAISED TO RS.3.00 LACS VIDE INSTRUCTION NO.3 OF 2011 DATED 9.2.2011 OF CBDT. T HE HONBLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. CAMCO COLOR CO. (254 ITR 565) HAVE HELD THAT ITA NO. 5654/M/08 A.Y:05-06 3 THE APPEAL FILED BY THE REVENUE AUTHORITIES IN CONT RAVENTION OF THE INSTRUCTION OF CBDT IS NOT MAINTAINABLE. THE HONBLE HIGH COURT OF BOMBAY IN CASE OF PITHWA ENGINEERING WORKS (276 ITR 519) HAVE ALSO HE LD THAT THE INSTRUCTION ISSUED BY THE CBDT PRESCRIBING TAX LIMIT FOR FILING OF APPEAL BEFORE TRIBUNAL OR HIGH COURT WOULD ALSO APPLY TO PENDING APPEALS EVEN THOUGH ON THE DATE OF FILING APPEALS, THE MONETARY LIMIT MAY HAVE BEEN LO WER. IN THIS CASE ON THE DATE OF FILING OF APPEAL THE MONETARY LIMIT WAS RS. 2.00 LACS WHICH HAS NOW BEEN RAISED TO RS.3.00 LACS. THEREFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CASE OF PITHWA ENGINEERI NG WORKS (SUPRA), THE APPEAL FILED BY THE REVENUE IN THIS CASE IS NOT MAI NTAINABLE AS TAX EFFECT IS LESS THAN RS.3.00 LACS. WE, THEREFORE, DISMISS THE APPEAL OF THE REVENUE AS NON-MAINTAINABLE. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27.10.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.10.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.