ITO 9(1)(4), MUMBAI V. FOBEOZ INDIA P.LTD, MUMBAI

ITA 6469/MUM/2013

• Counselvise Citation: 646919914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K BIRLA
• Assessee Lawyers: CHAMPA PUROHIT
• Keywords: Question of law; Tax effect
• Section: 143(3); 260A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI . . , , , # $ BEFORE SHRI R.C.SHARMA, AM AND MS.SUSHMA CHOWLA, JM ITA NO.6469/MUM/2013: A.Y 2010-11 THE ITO 9(1)(4) MUMBAI. . APPELLANT VS. M/S.FOBEOZ INDIA P LTD., FOBEOZ TOWERS, SHEETAL APARTMENTS, RAMCHANDRA LANE, KANCHPADA, MALAD (W), MUMBAI- 400 064. . RESPONDENT PAN : AAACF9720B % /APPELLANT BY : SHRI P K BIRLA % /RESPONDENT BY : SMT CHAMPA PUROHIT / DATE OF HEARING : 10.06.2015 / DATE OF PRONOUNCEMENT : 10.06.2015. / O R D E R PER SUSHMA CHOWLA, JUDICIAL MEMBER : THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS), DATED 30.08.2013, RELATING TO ASSESSMENT YEAR 2010-11, AGAINST ORDER PASSED U/S 143(3) OF THE INCOME-TAX A CT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE DI SALLOWED AMOUNTING TO RS.7,46,488/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD CLOSED DOWN ITS BUSINESS RELATING TO TRADING IN CHE MICALS DURING THE ITA NO.6469/MUM/2013. M/S.FOBEOZ INDIA PVT. LTD. 2 YEAR AND THE EXPENSES ATTRIBUTABLE TO THE SAID BUSI NESS HAS BEEN CORRECTLY DISALLOWED BY THE ASSESSING OFFICER? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE AD DITING OF EXCESS PROVISION WRITTEN BACK BY THE ASSESSEE IN PROFIT AN D LOSS ACCOUNT AND NOT OFFERED FOR TAX IN THIS YEAR, WITHOUT APPRECIAT ING THE FACT THAT THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS, HAD NOT CO NTENDED THAT HIS AMOUNT WAS NOT ALLOWED AS DEDUCTION IN THE EARL IER YEAR? 3. THE LEARNED AR FOR THE ASSESSEE POINTED OUT THAT THE TAX EFFECT IN THE PRESENT APPEALS IS BELOW THE LIMIT PRESCRIBED BY THE CBDT F OR FILING APPEAL BEFORE THE TRIBUNAL. THE LEARNED DR FOR THE REVENUE FAIRLY ADM ITTED THAT THE TAX EFFECT IN THE PRESENT APPEALS IS BELOW THE LIMITS NOW PRESCRIBED BY THE CBDT. IN RESPECT OF THE MERITS OF THE CASE, THE LEARNED DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE RECORDS 5.1. ON THE PERUSAL OF THE RECORD, WE FIND THAT THE PRESENT APPEAL IS FILED BY THE REVENUE AND THE TOTAL TAX EFFECT IN THE PRESENT APP EAL IS BELOW RS.4 LAKHS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY ADMITTED THAT THE TAX EFFECT IN THE PRESENT APPEAL WAS LESS THAN RS.4 LAK HS. 5.2 WE FIND THAT THE ISSUE IN THE PRESENT APPEALS I S SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. SMT. VIJAYA V. KAVEKAR REPORTED IN (2013) 350 ITR 237 (BOM) THAT T HE PROPOSITION REGARDING THE CIRCULARS ISSUED BY THE CBDT ARE NOT ONLY APPLICABL E TO THE NEW CASES BUT WOULD ALSO APPLICABLE TO THE PENDING APPEALS. 5.3 UNDER THE PROVISIONS OF SECTION 268(1) OF THE A CT, THE CBDT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONETARY LIMITS FOR T HE REVENUE TO FILE APPEALS BEFORE THE TRIBUNAL, ALL THE HIGH COURTS AND THE SUPREME C OURT. THE CBDT FROM TIME TO TIME, ISSUES INSTRUCTIONS FIXING THE MONETARY LIMIT S WITH THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWER SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10 .07.2014 HAD REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.2011 WHEREIN, THE MONETARY LIMITS AND ITA NO.6469/MUM/2013. M/S.FOBEOZ INDIA PVT. LTD. 3 OTHER CONDITIONS FOR FILING THE DEPARTMENTAL APPEAL S IN INCOME TAX MATTERS BEFORE THE APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME CO URT WERE SPECIFIED. THE INSTRUCTIONS ISSUED ON 10.07.2014 WERE IN SUPERSESS ION OF THE EARLIER INSTRUCTIONS AND THE MONETARY LIMITS HAVE BEEN ENHANCED BY THE P RESENT INSTRUCTION AND IT HAS BEEN PROVIDED THAT THE APPEALS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER:- S NO APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 4,00,000/ - 2. U/S 260A BEFORE HIGH COURT 10,00,000/ - 3. BEFORE SUPREME COURT 25,00,000/ - 5.4 THE REVISED MONETARY LIMIT FOR FILING THE APPEA LS BEFORE THE APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 LACS. FURTHER, UNDE R THE SAID INSTRUCTION, IT WAS ALSO DIRECTED THAT THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, THE DISPUTED ISSUE ARISES IN MORE THAN ONE A SSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD BE FILED IN RESPECT OF SUCH ASSES SMENT YEAR OR YEARS IN WHICH, THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDE D THE MONETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APPEALS CAN BE FILE D ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIF IED THAT IF THE APPEAL IS TO BE FILED IN RESPECT OF THE YEAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUCH APPEALS COULD ALSO BE FILED IN RESPECT O F ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN PRESCRIBED MONETARY LIM ITS. 5.5 IN THE FACTS OF THE PRESENT CASE, THE REVENUE H AD FILED THE APPEAL ON 01.11.2013. ADMITTEDLY, IN THE YEAR UNDER APPEAL, THE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBED IN INSTRUCTION NO.5 OF 2014 ISSU ED BY THE CBDT. AT THE TIME OF HEARING OF THE APPEAL, THE MONETARY LIMITS PRESCRIB ED BY THE CBDT STAND REVISED BY THE SAID INSTRUCTION NO.5 OF 2014, DATED 10.07.2014 UNDER WHICH, IT HAS BEEN PROVIDED THAT WHERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE ASSESSMENT YEAR THEN, NO APPEAL CAN BE FILED BEFORE THE APPELLATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE FILING OF THE APPEAL BY THE REVEN UE COULD BE APPLIED TO THE ITA NO.6469/MUM/2013. M/S.FOBEOZ INDIA PVT. LTD. 4 PENDING APPEAL OR APPLICABLE ONLY TO THE NEW CASES TO BE FILED BY THE REVENUE AFTER THE DATE OF ISSUE OF THE INSTRUCTIONS. 5.6 WE FIND THAT THE SAID ISSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA). THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPR A), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER DIVISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. POLYCOTT CORPORATION REPORTED IN (2009) 318 ITR 144 (BOM) WH EREIN, IT WAS HELD AS UNDER:- 8. IN CASE OF 'COMMISSIONER OF INCOME TAX V/S POLY COTT CORPORATION' REPORTED AT '(2009) 318 ITR 144 (BOM), A ANOTHER DI VISION BENCH OF THIS COURT CONSTRUED THE SAME INSTRUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BENCH OBSERVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULAR, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINI ON, THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THOUGH IT IS PUR SUANT TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT TH E COURT HAS TO CONSIDER IS THE PLAIN LANGUAGE OF THE PARA AND THE OBJECT BEHIND THE SAID PROVISIONS. THE OBJECT APPEARS TO BE NOT TO BU RDEN COURTS AND TRIBUNALS IN RESPECT OF MATTERS WHERE THE TAX EFFEC T IS LESS THAN THE LIMIT PRESCRIBED. EVEN BEFORE THIS INSTRUCTION, CBD T HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BEING ON 24TH OCT., 2005 WHERE THE MONETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTION S THE ONLY EXCEPTION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUEST ION OF LAW OF IMPORTANCE AS WELL AS IN CASES WHERE THE SAME QUEST ION OF LAW WILL REPEATEDLY ARISE, EITHER IN THE CASE CONCERNED OR I N SIMILAR CASE, APPEAL SHOULD BE FILED WITHOUT BEING HINDERED BY TH E MONETARY LIMITS. THE PRESENT INSTRUCTIONS SEEM EVEN TO LIMIT THE ISS UES INSOFAR AS THE SAME QUESTION OF LAW OR RECURRING ISSUE EXCEPT TO T HE EXTENT PROVIDED IN PARA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS I T WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF THE DISPUTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APPEAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEARS WHERE THE MONETARY LIMIT AS SPECIFIED IN PARA 3 OF THE INSTRUCTION. THE EXCEPTION, HOWEVER, IS CAR VED OUT IN RESPECT OF A COMPOSITE ORDER OF THE HIGH COURT OR APPELLATE AUTHORITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PASSED A COMPOSITE ORDER IN RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTIO N AND/OR ON DIFFERENT QUESTION AND FOR ONE OF THE ASSESSMENT YE ARS, THE TAX EFFECT IS MORE THAN THE MONETARY LIMIT THEN THE APPEAL SHA LL ALSO BE FILED IN RESPECT OF ALL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF THE ASSESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE BEG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCT ION OF THE INSTRUCTION. THE EXPRESSION 'WHICH INVOLVES MORE TH AN ONE YEAR' WOULD ITA NO.6469/MUM/2013. M/S.FOBEOZ INDIA PVT. LTD. 5 HAVE NO MEANING IF IT WAS RESTRICTED ONLY TO THE EX PRESSION 'COMMON ISSUES'. THE EXPRESSION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORDER IN RESPECT OF THE SAME ASS ESSEE FOR MORE THAN ONE YEAR. AN (ORDER) DISPOSING OF SEVERAL APPE ALS ON A COMMON QUESTION OF LAW BY APPELLATE AUTHORITY, CANNOT BE S AID TO BE A COMPOSITE ORDER AS THE ORDER INVOLVES APPEALS BY DI FFERENT PERSONS, WHICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TOGETHER FOR THE PURPOSE OF DISPOSAL ON THAT ISSUE. IN OUR OPINION, THIS WOULD BE THE CORRECT READING OF PARA 5 OF THE INSTR UCTION.' 5.7 THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS U NDER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM THE AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS ISSUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BOARD OF DIRECT TAXES, ARE A PPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CASES AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF THE INCOME TAX ACT, WHICH IS AN EXC EPTION TO THE PROVISIONS OF SECTION 260 OF THE ACT. THE CBDT BEING MINDFUL O F THIS POSITION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINION, THEREFO RE, THE INSTRUCTIONS WOULD BE APPLICABLE TO PENDING CASES AS WELL. WE HAVE ALREAD Y FOUND THAT THE INSTRUCTION NO. 5 OF 2008 AND INSTRUCTION NO. 3 OF 2011 ARE PARA-MATERIA. THE INSTRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRE TED BY THIS COURT IN CIT V/S MADHUKAR INAMDAR (SUPRA). IT IS NOT DISPUTED TH AT THIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AND THEREFORE STILL HOLDS THE FIELD. 5.8 FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCTION ISSUED BY THE CBDT UNDER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE AUTHORITIES, TRIBUNALS HAS BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFECT EXCEEDI NG RS.4 LACS WERE MAINTAINABLE. IN THE PRESENT APPEAL FILED BY THE REVENUE, THE MONETA RY LIMIT ADMITTEDLY, IS LESS THAN RS.4 LACS. IN VIEW OF INSTRUCTION NO.5 OF 2014 WHI CH ARE APPLICABLE NOT ONLY TO THE NEW APPEALS TO BE FILED BY THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE TRIBUNAL, WE DISMISS ALL THE APPEAL FILED BY THE RE VENUE BECAUSE OF SMALL TAX EFFECT. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 10 TH DAY OF JUNE, 2015. SD/- SD/- ( R.C.SHARMA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED :10 TH JUNE, 2015. SA ITA NO.6469/MUM/2013. M/S.FOBEOZ INDIA PVT. LTD. 6 % '#()* +*( / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # ( ) / THE CIT, MUMBAI. 4. # / CIT(A) 5. $% !!&' , &' , / DR, ITAT, MUMBAI 6. %() / GUARD FILE.