ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA V. M/S SHREE AGENCIES PVT. LTD., KOTA

ITA 917/JPR/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4054 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAN SINGH
• Keywords: Audit objection; Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 917 & 918/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 & 2013-14 ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-01, KOTA CUKE VS. M/S SHREE AGENCIES PVT LTD., B-45, I.P.I.A., JHALAWAR ROAD, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFCS3329A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAN SINGH (ADDL.CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : /10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A)- KOTA DATED 22.05.2018 FOR ASSESSMENT Y EAR 2012-13 & 2013-14 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- ITA. NO. 917/JP/2018 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 11,38,784/- M ADE BY THE AO U/S 14A READ WITH SECTION 8D. ITA NO. 917 & 918/JP/2018 ACIT, KOTA VS. SHREE AGENCIES PVT. LTD., KOTA 2 ITA. NO. 918/JP/2018 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 7,59,130/- MA DE BY THE AO U/S 14A READ WITH SECTION 8D. 2. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESS EE HAS RAISED AN OBJECTION ON MAINTAINABILITY OF THE APPEAL OF THE R EVENUE DUE TO THE TAX EFFECT NOT EXCEEDING RS. 20 LACS IN EACH OF THE TWO APPEALS AS PER THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11 TH JULY, 2018. 2.1. THE LD. D/R HAS FAIRLY SUBMITTED THAT THE TAX EFFECT INVOLVED IN THE REVENUES APPEAL IS LESS THAN 20 LACS WHICH IS PRES CRIBED THRESHOLD LIMIT IN TERMS OF THE CBDT CIRCULAR NO. 3/2018 DATED 11 TH JULY, 2018 ISSUED IN SUPERSESSION OF ITS EARLIER CIRCULAR NO. 21 OF 2015 DATED 10.12.2015. AT THE SAME TIME, HE SUBMITTED THAT THE MATTER FALLS I N EXCEPTION (B) TO PARA 10 OF THE SAID CIRCULAR WHICH READS AS UNDER: 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING IS SUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EF FECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF TH E PROVISIONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION M THE CASE HA S ITA NO. 917 & 918/JP/2018 ACIT, KOTA VS. SHREE AGENCIES PVT. LTD., KOTA 3 BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE A DDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT THE DEMAN D/ TAX EFFECT IN THE REVENUES APPEAL IN QUESTION ARISING OUT OF SEPARAT E ORDERS PASSED BY THE LD CIT(A) IN BOTH THE YEARS IS BELOW RS. 20.00 LACS . UNDER THE POWERS VESTED BY SECTION. 268A(1) OF THE I T ACT, C BDT HAS RECENTLY ISSUED CIRCULAR NO. 3/2018 DATED 11 TH JULY, 2018 (F NO. 279/MISC. 142/2007-ITJ(PT) INSTRUCTING THE AUTHORIT IES BELOW THAT DEPARTMENTAL APPEAL SHOULD NOT BE FILED BEFORE ITAT WHERE THE DEMAND/TAX EFFECT DOES NOT EXCEED RS. 20 LACS. THE CIRCULAR IS SPECIFICALLY MENTIONED TO BE APPLICABLE FOR ALL PENDING APPEALS. 4. SUBJECT TO SOME EXCEPTIONS, IT IS FURTHER DIREC TED BY CBDT THAT ALL THE DEPARTMENTAL APPEALS PENDING BEFORE ITAT WHERE THE DEMAND/TAX EFFECT IS NOT EXCEEDING THAN RS 20 LACS SHOULD BE E ITHER WITHDRAWN OR NOT PRESSED BY THE DEPARTMENTAL REPRESENTATIVES. 5. REGARDING THE CONTENTION OF THE LD DR THAT THE PRESENT CASE OF THE REVENUE FALLS IN EXCEPTION 10(B) OF THE AFORESA ID CBDT CIRCULAR, WE FIND THAT THE SAID EXCEPTION TALKS ABOUT CASES WHER E BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA ITA NO. 917 & 918/JP/2018 ACIT, KOTA VS. SHREE AGENCIES PVT. LTD., KOTA 4 VIRES. IN THE PRESENT CASE, THE LD CIT(A) HAS DECI DED TO FOLLOW THE RATIO LAID DOWN BY VARIOUS COURTS THAT SECTION 14A DISALL OWANCE NOT TO BE MADE WHERE THERE IS NO EXEMPT INCOME AND HAS NOT FO LLOWED THE CBDT CIRCULAR NO. 5/2014 DATED 11.2.2014. THE LD CIT(A) FIRSTLY IS NOT AN AUTHORITY TO HOLD SUCH CIRCULAR AS ILLEGAL OR ULTRA VRES AND SECONDLY, AS WE HAVE NOTED ABOVE, HE HAS DECIDED NOT TO FOLLOW THE SAID CIRCULAR AND HAS FOLLOWED THE RATIO LAID DOWN BY VARIOUS COURTS. THERE IS THUS A DISTINCTION BETWEEN HOLDING A CIRCULAR AS ILLEGAL A ND NOT FOLLOWING THE SAID CIRCULAR. IN LIGHT OF THE SAME, THE PRESENT A PPEAL IS NOT COVERED BY ANY EXCEPTIONS MENTIONED IN THE SAID CBDT CIRCULAR. SINCE THE TAX DEMAND IN DISPUTE IN THESE TWO DEPARTMENTAL APPEALS IS BELOW THE LIMIT SET OUT BY CBDT FOR THE APPEAL, BOTH THE APPEALS OF THE DEPARTMENT ARE NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018. ACCORDINGLY, THE APPEALS OF THE DEPARTM ENT ARE DISMISSED AS NOT PRESSED/WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON /10 /2018. FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- /10/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-01, KOTA 2. IZR;FKHZ@ THE RESPONDENT- M/S SHREE AGENCIES PVT LTD., KOTA ITA NO. 917 & 918/JP/2018 ACIT, KOTA VS. SHREE AGENCIES PVT. LTD., KOTA 5 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 917 & 918/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR