The ACIT, Circle-2(1)(1), Ahmedabad V. M/s. Intas Pharmaceuticals, Ahmedabad

MA 20/AHD/2022

AI Insights

The case involves the Income Tax Department's appeal against Intas Pharmaceuticals regarding the deduction claimed under section 80IE(1) of the Income Tax Act for its Sikkim unit. Initially, the department's appeal was dismissed by the ITAT due to the low tax effect, which was below the threshold set by CBDT Circular No. 17 of 2019. However, the department later filed a Miscellaneous Application claiming that the tax effect was actually above the threshold. The ITAT dismissed the application after finding that the department's calculation was incorrect and that the tax effect did not exceed the prescribed limit.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133638 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 26-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DHRUMAL BHATT
• Keywords: Tax effect; Tax effect
• Section: 143(3)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘D’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER Misc.Application No.20/Ahd/2022 IN ITA No.1312/Ahd/20120 Assessment Year : 2012-13 ACIT, Cir.2(1)(1) Ahmedabad. Vs. M/s.Intas Pharmaceuticals Nr.Sola Bridge SG Highway Thaltej, Ahmedabad. PAN : AACFI 0241 H 0 अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : Shri Dhrumal Bhatt, AR Revenue by : Ms.Saumya Pandey, Jain, Sr.DR स ु नवाई क तार ख/Date of Hearing : 21/07/2023 घोषणा क तार ख /Date of Pronouncement: 02/08/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present Misc. Application is filed by the Revenue under section 254(2) of the Income Tax Act, 1961 ("the Act" for short) seeking recall of theorder of the ITAT passed in ITA No.1312/Ahd/2019 dated 22.10.2021dismissing the Revenues appeal on account of tax effect being below that prescribed by the CBDT for filing appeals vide Circular No.17 of 2019 dt 08/08/2019. 2. At the outset, it was pointed out to the Bench that the Registry has noted the Misc.Application filed by the Revenue being filed beyond the time prescribed by 26 days. In this connection, the Department has filed delay condonation application/affidavit MA No.20/Ahd/2022 2 through Shri Deepak Pareek, Asstt.CIT, Cent.Cir.2(3), Ahmedabad deposing that the delay in filing the MA before the Tribunal occurred due to administrative reasons, such as taking decision and getting necessary approval for filing the MA, and therefore, the impugned delay being on account of genuine and bona fide reasons, the same be condoned and the MA may be decided on merit. On the other hand, the ld.counsel for the assessee has no objection if the delay is condoned. 3. In the light of the reasons narrated by the department in its condonation application, which appear to be justifiable and the quantum of delay being small, in the interest of justice, we condone the delay of 26 days in filing MA by the Department before the Tribunal and take the MA for adjudication on merit. 4. Vide the above MA, the Department pleaded as under: “In this case, the assessee filed return of income on 27.09.2012 declaring total income of Rs.66,64,08,110/-. The case was selected for scrutiny and the assessment order u/s. 143(3) of the Act was passed on 20.03.2015 wherein the deduction claimed by the assessee u/s. 80IE(1) of the Act w.r.t. Sikkim Unit was reduced by an amount of Rs. 95,08,02,541/-on the ground that the expenditure to the extent of Rs.95,08,02,541/- pertaining to Sikkim Unit was found to have diverted in the hands of Intas Pharmaceuticals Ltd. 2. The assessee went into appeal before the Ld.CIT(A) who vide order dated 31/05/2019 held that the assessee firm has diverted its expenditure to the extent of Rs. 40,49,19,184/- only as against Rs. 95,08,02,542/- worked out by the AO and accordingly adjudicated that deduction u/s. 80IE of the Act claimed by the assessee warrants reduction to the extent of Rs.40,49,19,184/- Only. Aggrieved with the order of the Ld.CIT(A), Revenue filed appeal before the Hon'ble ITAT which vide order dated 22.10.2021 in ITA no. 1312/Ahd/2019 dismissed the appeal of the Revenue contended as under: "Admittedly, tax effect involved in this appeal is NIL. CBDT vide Instruction dated 8.8.2019 prohibited the Revenue not to file appeal MA No.20/Ahd/2022 3 before the Tribunal where tax effect involved in the matter appeal is .below Rs. 50 lakhs. However, there are certain exception given in the Circular where the revenue can filed the appeal before the Tribunal, without considering threshold limit prescribed by the CBDT. The Id. DR has not pointed out under which circumstances, appeal of the Revenue can be adjudicated by the Tribunal in violation of the above CBDT Circular, despite knowing that tax effect involved in the appeal is NIL. Before us, the Id. DR was unable to defend contents of the letter dated 13.10.2021 for adjudicating the issue on merit. Therefore, we dismiss the appeal of the Revenue at the threshold being not maintainable due to low tax effect." 3. It is pertinent to mention that by inadvertent error the tax effect was mentioned as Nil in the appeal memo as well as under letter dated 13/10/2021. The tax effect in an appeal is calculated in the manner prescribed in Circular No. 21/2015 of C.B.D.T. Here, the "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 issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues'"). However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of inters is the issue under dispute, the amount of interest shall 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 order, the tax effect will means quantum of penalty deleted or reduced in the order to be appealed against". 4. The dispute is with regard to deduction by the assessee u/s. 80IE(1) of the Act w.r.t. Sikkim Unit which was reduced by an amount of Rs.95,08,02,541/- by the Assessing Officer. The Id. CIT(A) has in his order confirmed the amount of diverted expenditure to the extent of Rs.40,49,19,184/-. Hence, CIT(A) has allowed the relief to the extent of Rs.54,58,83,357/-(Rs.95,08,02,541 - Rs.40,49,19,184). Hence, the tax effect of the disputed issues comes at Rs.17,71,11,855/-. 4. Since the overall tax effect involved on the disputed issue is above the prescribed monetary limit prescribed by CBDT Circular No 17/2019 of 08.08.2019. 5. In view of the same, appeal decided by the Hon'bleITAT in the present case is required to be restored back and thesame may be decided on merits of the case after consideringrelevant facts. Hence, this Miscellaneous Application is being filed.” MA No.20/Ahd/2022 4 5. It was pointed out to us that the appeal of the Department was erroneously dismissed by the ITAT on account of low tax effect. The contention of the Department in its MA is that tax effect involved was much more than the prescribed limit. 6. During the course of hearing before us, the ld.DR contended that tax effect in the impugned case originally was not calculated in accordance with the CBDT Circular which prescribed that where the assessee had returned loss and addition had been made to the income, resulting in reduction in quantum of loss, the tax effect is to be computed onthe additions made. 7. To this, the ld.counsel for the assessee pointed out that assessee in the present case had returned positive income and not loss, and therefore, the assessee’s case did not fall in the specified clause as stated by the ld.DR for the purpose of computing tax involved in the present case. 8. The ld.DR fairly admitted to the said fact and further pointed out that the assessee had returned positive income and the only effect that the adjustment made by the AO was that the quantum of deduction claimed by it under Chapter-VIA was reduced on account of attributing higher expenses to the assessee-unit eligible for deduction under chapter VIA, and therefore, she admitted that after adjustment made by the AO by reducing the claim of profits eligible for deduction under the Chapter VIA, the assessed income of the assessee remained the same, as being positive. 9. In view of the above, since admittedly, the department’s contention of tax effect involved in the present case exceeding that MA No.20/Ahd/2022 5 prescribed by the CBDT, does not survive, we see no merit in the present MA filed by the Department and dismiss the same. 10. In the result, Misc. Application of the Revenue is dismissed. Order pronounced in the Court on 2 nd August, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 2/08/2023