DCIT, Circle - 5, Kolkata, Kolkata V. M/s. Biswanath Industries Ltd., Kolkata

ITA 590/KOL/2011

• Counselvise Citation: 59023514 RSA 2011
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 13-04-2011
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANIK
• Assessee Lawyers: R SALARPURIA
• Keywords: Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 590/KOL/2011 %& '(/ ASSESSMENT YEAR : 2004-05 (*+ / APPELLANT ) D.C.I.T., CIRCLE-5, KOLKATA - % - - VERSUS - . (-.*+/ RESPONDENT ) M/S. BISWANATH INDUSTRIES LTD., KOLKATA (PAN: AACCB 1425 H) *+ / 0 '/ FOR THE APPELLANT: SHRI A.K.PRAMANIK -.*+ / 0 '/ FOR THE RESPONDENT: SHRI R.SALARPURIA '1 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE APPEAL IS FILED BY THE REVENUE AGAINST T HE ORDER DATED 25.01.2011 OF THE CIT(A)-VI, KOLKATA PERTAINING TO A.YR. 2004- 05. 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FO LLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A-VI, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS BY DELETING TH E DISALLOWANCE U/S 14A OF RS.4,18,637/- AND COMPUTING DISALLOWANCE U/S 14A AT RS.3,91,415/-, @1% OF EXEMPT INCOME I.E. RS.3,91,41,597/- WITHOUT ANY BAS IS AND LOGIC, WHICH IS MORE SO AS IN THE CASE OF CIT VS HERO CYCLES, NOVEMBER 4 , 2009 (P&H) IT WAS HELD THAT EVEN IF THE FUNDS ARE MERGED IN A COMMON KITTY , THE DISALLOWANCE U/S 14A IS JUSTIFIED AND IN THE CASE OF GODREJ & BOYCE MANU FACTURING CO. LTD. CERTAIN PRINCIPLES HAVE BEEN LAID DOWN TO COMPUTE DISALLOWA NCE U/S 14A. 2. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DEL ETE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 3. AT THE OUTSET, AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE TAX EFFEC T IN THIS CASE IS ONLY RS.1,75,913/- WHICH IS BELOW RS.2 LAKHS.. THEREFORE, AS PER THE I NSTRUCTION OF CBDT CIRCULAR THE REVENUE IS BARRED FROM FILING OF THE APPEAL BEFORE THIS TRIBUNAL. 4. THE LD. DR APPEARING ON BEHALF OF THE REVENUE C OULD NOT CONTRADICT THE ABOVE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSERVED THAT THE TAX EFFECT IN THIS C ASE IS BELOW RS.2 LAKHS. 5.1. ADMITTEDLY THE TAX PAYABLE IN RESPECT OF GROUN DS OF APPEAL BY THE DEPARTMENT IS LESS THAN RS.2 LAKHS AND AS PER REVISED INSTRUCT ION OF THE CBDT NO. 279 DATED 24 TH OCTOBER, 2005 W.E.F. 31.10.2005 AND SINCE IN THE PR ESENT CASE, THE ABOVE REVISED INSTRUCTION OF CBDT IS WELL APPLICABLE AND THEREFOR E, IN OUR CONSIDERED OPINION, THE REVENUE SHOULD HAVE REFRAINED FROM FILING SECOND AP PEAL BEFORE THE TRIBUNAL. IT WOULD BE APT TO QUOTE THE OBSERVATION OF THE DELHI HIGH C OURT IN THE CASE OF CIT VS.- ITAT 232 ITR 207 AT PAGE 216 AS BELOW :- THE CENTRAL BOARD OF DIRECT TAXES INSTRUCTIONS ARE BINDING ON THE DEPARTMENT. IF THE CASE AT HAND IS C OVERED BY A POLICY LAID DOWN BY THE CENTRAL BOARD OF DIREC T TAXES IN THAT CASE NO FAULT CAN BE FOUND WITH THE ORDER O F THE TRIBUNAL REFUSING TO STATE THE CASE AND THERE IS NO REASON WHY THE HIGH COURT SHOULD INTERFERE WITH SUCH DISCR ETION OF THE TRIBUNAL AS HAS BEEN EXERCISED CONSISTENTLY WIT H THE UNIFORM POLICY LAID DOWN BY THE CENTRAL BOARD OF DI RECT TAXES WHICH BINDS ALL THE SUBORDINATE AUTHORITIES O F THE INCOME TAX DEPARTMENT. THE HIGH COURT WOULD NOT ORDINARILY ENCOURAGE BREACH OF POLICY DECISIONS AND THE DEPARTMENTAL INSTRUCTIONS WHICH HAVE A PUBLIC PURPO SE BEHIND THEM. VALUABLE TIME OF HIGH COURTS AND HIGHL Y PLACED TRIBUNALS IS NOT TO BE WASTED ON PETTY MATTE RS. 5.2. FURTHER, THE BOMBAY HIGH COURT HAS ALSO HELD I N THE CASE OF CIT VS.- CAMCO COLOUR LTD. (SUPRA) AND IN THE CASE OF PITHWA ENGIN EERING WORKS REPORTED IN 276 ITR 519 MUMBAI THAT THE CIRCULAR IS BINDING ON THE REVE NUE AND AN APPEAL OR REFERENCE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WOULD NOT BE CONSIDERED BY THE COURT. 5.3. WE FURTHER FIND THAT IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE 3 OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATIO N LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THA T WHEN A CIRCULAR 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 T O THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRA RY TO THE CIRCULAR ISSUED BY THE CBDT INSTRUCTION NO.5 OF 2008 DATED 15.5.2008. 5.4. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FILED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY T O THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPA RTMENT IS DISMISSED IN LIMINE . 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2011. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 22.07.2011 '1 / -2 3'2'4- COPY OF THE ORDER FORWARDED TO: 1. M/S.BISWANATH INDUSTRIES LTD., 16, INDIA EXCHANGE P LACE, KOLKATA-700001. 2 THE DCIT, CIRCLE-5, KOLKATA 3. THE CIT, 4. THE CIT(A)-VI, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .2 -/ TRUE COPY, '1%9/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 4