ACIT, Circle-36, Kolkata, Kolkata V. M/s Suman Creation, Kolkata

ITA 677/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5843 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Tax effect

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 677/KOL/2017 ASSESSMENT YEARS: 2013-14 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-36, KOLKATA. VS. M/S. SUMAN CREATION (PAN: ABYFS8348G) APPELLANT RESPONDENT & C.O. NO. 26/KOL/2017 IN I.T.A. NO. 677/KOL/2017 ASSESSMENT YEARS: 2013-14 M/S. SUMAN CREATION VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-36, KOLKATA. CROSS OBJECTOR RESPONDENT DATE OF HEARING 16.07.2018 DATE OF PRONOUNCEMENT 20.07.2018 FOR THE APPELLANT SHRI ARINDAM BHATTACHARJEE, ADDL. CIT, DR FOR THE RESPONDENT SHRI SUNIL SURANA, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE AGAINST THE ORDER OF LD. CIT(A)-10, KO LKATA DATED 18.01.2017 FOR AY 2013-14. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ORDER OF LD. CIT(A) AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETI NG PENALTY U/S. 271AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) TO THE TUNE OF RS.17,24,230/-. 3. AT THE OUTSET IT WAS BROUGHT TO OUR NOTICE BY TH E LD. AR THAT THE APPEAL PREFERRED BY THE REVENUE IS HIT BY THE NEW CIRCULAR OF THE CBDT I.E. CIRCULAR NO. 3/2018 DATED 11.07.2018 WHEREIN THE CBDT HAS DIRECTED THE DEPARTMENT TO WIT HDRAW/NOT PRESS THE APPEAL IF THE TAX 2 ITA NO.677/KOL/2017 M/S. SUMAN CREATION, AY 2013-14 2 EFFECT IS LESS THAN RS. 20 LACS BEFORE THE ITAT. HOWEVER, THE LD. DR POINTED OUT THAT THE ISSUE IS REGARDING TRANSFER PRICING AND INTERNATION AL TAXATION, THEREFORE, HE SOUGHT ADJOURNMENT. HOWEVER, TAKING NOTE OF THE CBDT CIRC ULAR NO. 3/2018 DATED 11.07.2018 WHEREBY THE MONETARY LIMITS FOR FILING OF APPEALS B Y THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE S UPREME COURT HAVE BEEN INCREASED AS MEASURE FOR REDUCING LITIGATION. THE REVISED MONETA RY LIMITS LAID DOWN IN PARA-3 OF THIS CIRCULAR AND THE MANNER OF COMPUTING TAX EFFECT AS LAID DOWN IN PARA-4 OF THIS CIRCULAR ARE AS FOLLOWS: '3 . HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: SL. NO. APPEALS/SL.P'S IN INCOME-TAX MATTERS M ONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 20,00,000/- 2. BEFORE HIGH COURT 50,00,000/- 3. BEFORE SUPREME COURT 1,00,00,000/- 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 DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUC H TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEA L IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES). FURTHER, 'TAX EFFECT' SHALL B E TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THER EON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST I S THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST S HALL BE THE TAX 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 APPEALED AGAINST. ' 4. IN PARA-13 OF THE SAID CIRCULAR IT HAS FURTHER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RELEVANT PAR A-13 OF THE CIRCULAR READS THUS: '13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTI VELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SP ECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. 5. IN THE PRESENT CASE, THE TAX EFFECT IN THIS APP EAL BY THE REVENUE IS LESS THAN RS.20,00,000/-. THOUGH THIS APPEAL HAD BEEN FILED B Y THE REVENUE ON 06.04.2017 AND WAS WITHIN THE MONETARY LIMIT IN THE FORM OF TAX EFFECT FOR FILING APPEALS BEFORE TRIBUNAL, IN VIEW 3 ITA NO.677/KOL/2017 M/S. SUMAN CREATION, AY 2013-14 3 OF PARA-13 OF THE CIRCULAR OF CBDT, EVEN SUCH APPEA LS WILL BE GOVERNED BY THE NEW MONETARY LIMITS LAID DOWN IN THE CBDT CIRCULAR NO.3 /2018 REFERRED TO ABOVE. 6. IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED B Y CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN TH E CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAI NS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATIO N HAS CERTAINLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT CIRCULAR NO.3 DATED 11. 07.2018. 7. IN THE EVENT, THE REVENUE FINDS AT A LATER POIN T OF TIME THAT THE TAX EFFECT IN THE APPEAL IS MORE THAN RS.20 LAKHS OR DESPITE LOW TAX EFFECT THE APPEAL OF THE REVENUE IS MAINTAINABLE, THE REVENUE IS AT LIBERTY TO MOVE THI S TRIBUNAL FOR RECALLING OF THIS ORDER. 8. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FI LED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY TO TH E POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPARTMENT IS DISMI SSED IN LIMINE. 9. THE CROSS OBJECTION FILED BY THE ASSESSEE IS SUP PORTIVE IN NATURE AND HENCE, THE SAME IS DISMISSED. 9. IN THE RESULT, THE APPEAL BY THE REVENUE AND TH E CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. SD/- SD/- [ DR. A. L. SAINI] [A.T. VARKEY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH JULY, 2018 JD.(SR.P.S.) 4 ITA NO.677/KOL/2017 M/S. SUMAN CREATION, AY 2013-14 4 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ACIT, CIRCLE-36, KOLKATA. 2 RESPONDENT M/S. SUMAN CREATION, 1, GOUR DAS BAS AK LANE, GROUND FLOOR, KOLKATA-700 007. 3. THE CIT(A) -10, KOLKATA. (SENT THROUGH E-MAIL) 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY