Assistant Commissioner of Income Tax, Circle-1, Khammam V. Smt. Eswarapragada Usha Rani, Khammam

MA 15/Hyd/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 5768 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRASADA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER MA NO. 15/HYD/2018 (ARISING OUT OF ITA. NO. 103 /HYD/ 2013 ASSESSMENT YEAR: 2009 - 2010 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1, KHAMMAM. VS. SMT. ESWARAPRAGADA USHA RANI, KHAMMAM. PAN:AADPE 0308 G (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE : SHRI PRASADA RAO, DR DATE OF HEARING : 16.02 .2018 DATE OF PRONOUNCEMENT : 21 .0 2 .2018 ORDER PER D. MANMOHAN , VP. BY THIS APPLICATION THE REVENUE SEEKS RECTIFICATION OF THE TRIBUNALS ORDER DATED 23.08.2017 (ITA NO.103/HYD/2013) ON THE GROUND THAT THE TAX EFFECT INVOLVED IN THIS APPEAL HAVING EXCEED ED RS.10 LAKHS , CIRCULAR NO. 21/2015 , ISSUED BY THE CBDT , DOES NOT APPLY TO THE INSTANT CASE AND THE TRIBUNAL OUGHT TO HAVE TAKEN UP THE APPEAL ON MERITS. 2. LD. AUTHORISED REPRESENTATIVE BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL (SUPRA) AND SUBMITT ED THAT SUPER TAX AND FRINGE BENEFIT TAXES ARE NOT DISTINCT FROM INCOME TAX AND THE SAME IS CLEAR AS PER THE PROVISIONS OF SUB - SECTION 43 OF SECTION 2 OF THE ACT. HE ALSO SUBMITTED THAT ACCORDING TO FINANCE ACT - WHICH SPECIF IES THE INCOME TAX - SURCHARGE AND EDUCATION CESS ARE PART AND PARCEL OF INCOME TAX 2 AND IN THE PRESENT CASE THE TAX EFFECT EXCEEDS RS. 10 LAKHS , IF THE SAID SURCHARGE AND EDUCATION CESS INCLUDE D, IN WHICH EVENT CIRCULAR NO.21/2015 (DATED 10.12.2015) ISSUED BY THE CBDT IS NO T APPLICABLE AND THE TRIBUNAL SHOULD HAVE TAKEN UP THE APPEAL ON MERITS INSTEAD OF DISMISSING ON THE GROUND OF LESS TAX EFFECT. 3. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE TRIBUNAL (DATED 23.08.2017) AND ALSO RELIED ON VAR IOUS DECISIONS OF THE TRIBUNAL VIZ., THE DECISION OF THE ITAT CHENNAI BENCH A IN THE CASE OF ACIT VS. R. VISWANATHAN (M.A. NO.155/MDS/2011) DATED 23.09.2011 AND THE DECISION OF THE ITAT HYDERABAD B BENCH IN THE CASE OF ITO VS. P. PRASEN KUMAR (M.A. NO. 63/HYD/2016) DATED 07.12.2016 WHEREIN THE TRIBUNAL HELD THAT TAX DOES NOT INCLUDE SURCHARGE AND CESS. 4. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED THE RECORD. WHILE DEALING WITH AN IDENTICAL ISSUE, THE COORDINATE BENCH IN THE CASE OF P. PRASEN KUMAR (SUPRA) HELD AS UNDER: - 6. WE HAVE CONSIDERED THE ISSUE. AS FAR AS THE DEFINITION OF TAX IS CONCERNED, THE TAX DOES NOT INCLUDE SURCHARGE AND CESS AS PER THE ABOVE REFERRED CASES. THE COORDINATE BENCH IN THE CASE OF DCIT VS. DOME BELL ELECTRONICS (SUPRA) HAS CONSIDERED THIS ISSUE VIDE PARA 3.2 OF ITS ORDER, WHICH READ AS UNDER: - 3.2. WE HAVE GONE THROUGH THE FACTS OF THIS CASE AND ALSO GONE THROUGH THE AFORESAID CIRCULAR AS WELL AS SUB - SECTION (43) OF SECTION 2 OF THE ACT WHICH DEFINES WORD TAX. IT IS NOTED THAT THE IDENTICAL ISSUE CAME UP BEFORE THE CHENNAI BENCH WHEREIN THE HONBLE BENCH HELD AS UNDER: WE FIND THAT IN CLAUSE (4) OF INSTRUCTION NO.5 OF 2008D DATED 15 TH MAY, 2008 OF CBDT, TAX EFFECT IS DEFINED AS UNDER: - 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREAFTER REFERRED TO AS DISPUTED I SSUES). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON. SIMILARLY, IN LOSS CASES NOTIONAL TAX EFFECT SHOULD BE TAKEN INTO ACCOUNT. IN THE CASE OF PENALTY ORDERS, THE TAX 3 EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. NOTHING HAS BEEN MENTIONED IN THE ABOVE DEFINITION TO SHOW THAT TAX WILL INCLUDE SURCHARGE FOR THE PURPOSE OF APPLYING THE SAID CIRCULAR. NOW IF WE LOOK AT THE DEFINITION OF TAX AS PER SUB - SECTION (43) OF SECTION 2 OF INCOME TAX ACT, 1961, IT RUNS AS UNDER: - (43) TAX IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1965, AND ANY SUBSEQUENT ASSESSMENT YEAR MEANS INCOME - TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT, AND IN RELATION TO ANY OTHER ASSESSMENT YEA R INCOME - TAX AND SUPER - TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT PRIOR TO THE AFORESAID DATE [AND IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 2006, AND ANY SUBSEQUENT ASSESSMENT YEAR INCLUDES THE FRINGE BENEFIT TAX PAYABLE UNDER SECTION 115WA]. IT IS CLEAR THAT TAX, AS PER THE ABOVE DEFINITION, WOULD INCLUDE SUPER TAX AND ALSO FRINGE BENE3FIT TAX BUT NOT SURCHARGE. ADMITTEDLY, HERE, THE TAX WAS ONLY 2,90,250/ - WHICH IS BELOW THE LIMIT OF RS. 3 LAKHS PRESCRIBED IN THE CIRCU LAR FOR FILING APPEALS BEFORE THIS TRIBUNAL. RESULTANTLY, WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THIS TRIBUNAL MUCH LESS ANY MISTAKE APPARENT ON RECORD. WE HAVE ALSO GONE THROUGH SUB - SECTION (43) OF SECTION 2 WHICH DEFINES TAX. THE PERUSAL OF THE DEFINITION SHOWS THAT WHATEVER WAS INTENDED TO BE INCLUDED IN TAX HAS BEEN MENTIONED THEREIN. WHEN THE LEGISLATURE HAS MENTIONED THE WORDS SUPER TAX AND FRINGE BENEFIT TAX AND EDUCATION CESS AS WELL, IF THERE WAS ANY INTENTION TO INCLUDE THEM IN THE WORD TAX. THUS, WE RESPECTFULLY AGREE WITH THE DECISION TAKEN BY THE CHENNAI BENCH. IN OUR VIEW, SURCHARGE AND EDUCATION CESS SHALL NOT BE INCLUDED IN THE WORD TAX FOR THE PURPOSE OF EXAMINING OF TAX EFFECT AS ENVISAGED IN CIRCULAR OF BOARD DATED 10 TH DECEMBER, 2015 NO.21/ 2015. THUS THE TAX EFFECT BEING LESS THAN RS. 10 LAKHS, IMPUGNED APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND THEREFORE SAME IS HEREBY DISMISSED. OUR ORDER HAS NO EFFECT ON THE MERITS OF THIS CASE. IN VIEW OF THIS AND KEEPING IN MIND THE PRINCIPLES LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DALMIA CEMENT (BHARAT) LTD., WE ARE OF THE OPINION THAT SURCHARGE AND EDUCATION CESS SHOULD NOT BE INCLUDED WHILE CALCULATING THE TAX EFFECT. SINCE THE TAX THEREON IS RS. 9 LAKHS, WHICH IS LESS THAN RS. 10 LAKHS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE MA FILED BY THE REVENUE. 5. IN THE ABOVE DECISION, THE TRIBUNAL DISCUSSED THE ISSUE AT LENGTH AND HELD THAT SURCHARGE AND EDUCATION CES S SHOULD NOT BE INCLUDED WHILE CALCULATING THE TAX EFFECT . THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL BEING LESS THAN RS. 10 LAKHS WE RESPECTFULLY FOLLOW THE DECISION S OF THE COORDINATE BENCH ES (SUPRA) TO HOLD THAT THE ORDER PASSED BY THE 4 TRIBUNAL DOE S NOT GIVE RAISE TO ANY MISTAKE APPARENT ON RECORD . IN OTHER WORDS, NO MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE. 6. IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 S T FEBRUARY, 2018. S D / - S D / - (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 2 1 S T FEBRUARY , 2018. OKK, SR.PS COPY TO 1. SMT. ESWARAPRAGADA USHA RANI, 10 - 2 - 116, MAMILLAGUDEM, KHAMMAM. 2. ACIT, CIRCLE - 1, KHAMMAM. 3. CIT (A), VIJAYAWADA. 4. CIT, VIJAYAWADA 5. DR, ITAT, HYDERABAD. 6. GUARD FILE