Assistant Commissioner of Income Tax Circle-7(1)(1), Bangalore V. M/s UB Infrastructure Projects Limited , Bangalore

MA 60/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1258 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 12-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYADRASHI MISHRA BANGALORE
• Assessee Lawyers: K R PRADEEP
• Keywords: Period of limitation; Tax effect
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER MP NO.60/BANG/2020 (IN IT(TP)A NO.2813/BANG/2018) ASSESSMENT Y EAR : 2013 - 14 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), BANGALORE. VS. M/S. UB INFRASTRUCTURE PROJECTS PVT. LTD., NO.24, UB CITY, UB TOWERS, LEVEL 12, VITTAL MALLYA ROAD, BANGALORE 560 001. PAN : AAACT 9124 B APPELLANT RESPONDENT REVENUE BY : SHRI. PRIYADRASHI MISHRA, ADDL. CIT(DR)(ITAT), BANGALORE ASSESSEE BY : SHRI. K. R. PRADEEP, ADVOCATE DATE OF HEARING : 11 . 12 .20 20 DATE OF PRONOUNCEMENT : 16 .12 .20 20 ORDER PER N. V. VASUDEVAN, VICE PRESIDENT: THIS IS A MISCELLANEOUS PETITION FILED BY THE REVENUE U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT) PRAYING FOR RECALLING THE ORDER DATED 28.08.2019 PASSED BY THE TRIBUNAL DISMISSING THE AFORESAID APPEAL OF THE REVENUE ON THE GROUND THAT THE TAX EFFECT INVOLVED IN THE REVENUES APPEAL WAS LESS THAN RS.50 LAKHS AND IN VIEW THE CBDT CIRCULAR NO. 17/2009, THE REVENUE CANNOT FILE APPEALS BEFORE THE TRIBUNAL WHERE THE TAX EFFECT INVOLVED IN THE APPEAL IS LESS THAN RS. 50 LAKHS. 2. IN THIS PETITION, REVENUE HAS POINTED OUT THAT THE TAX EFFECT IN THE APPEAL IS MORE THAN 50 LAKHS AND IS IN FACT A SUM OF RS.54,84,025 WHICH IS CALCULATED AT 33.99% OF THE DISPUTED ADDITION WHICH WAS DISALLOWANCE OF EXPENSES U/S.14A OF THE ACT OF RS.1,61,34,228/-. 3. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT SINCE THE ORDER OF TRIBUNAL WAS PASSED ON 28.08.2019, IN TERMS OF SECTION 254(2) OF THE ACT THE MP OUGHT TO HAVE MP NO.60/BANG/2020 (IN IT(TP)A NO.2813/BANG/2018) PAGE 2 OF 4 BEEN FILED WITHIN 6 MONTHS FROM THE DATE OF THE ORDER I.E., ON OR BEFORE 27.02.2020. SINCE THE MP HAS BEEN FILED ON 12.03.2020, THE SAME SHOULD BE DISMISSED. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE PLACED ON RELIANCE ON THE ORDER OF TRIBUNAL IN THE CASE OF M/S ALTEN CALSOFT LABS (INDIA) PVT. LTD., V. DCIT , IN MP NO. 69/BANG/2018, ORDER DATED 12.10.2018 WHEREIN A VIEW HAS BEEN EXPRESSED THAT PERIOD OF LIMITATION FOR FILING MP U/S 254(2) HAS TO BE RECKONED FROM THE DATE OF THE ORDER. 4. THE LD. DR ON THE OTHER HAND HAS POINTED OUT THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF GOLDEN TIMES SERVICES LTD., V. DCIT (2020) 103 TAXMAN.COM 524 (DEL) HAS TAKEN THE VIEW THAT PERIOD OF LIMITATION UNDER SECTION 254(2) OF THE ACT HAS TO BE RECKONED FROM THE DATE OF SERVICE OF THE ORDER ON THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE, IN REPLY, SUBMITTED THAT THE DECISION OF DELHI HIGH COURT IS IN THE CONTEXT OF EX-PARTE ORDER PASSED BY THE TRIBUNAL, WHEREAS IN THE PRESENT CASE THE DR WAS PRESENT WHEN THE IMPUGNED ORDER WAS PASSED AND THEREFORE THE DECISION OF HONBLE DELHI HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 5. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE PERIOD OF LIMITATION HAS TO BE RECKONED FROM THE DATE OF RECEIPT OF THE ORDER BY THE REVENUE WHICH WAS ONLY ON 20.11.2019. RECKONED FROM THAT DATE, MP FILED ON 12.03.2020 IS WITHIN THE TIME PRESCRIBED U/S 254(2) OF THE ACT. WE ARE OF THE VIEW THAT THE FACT THAT THE ORDER OF THE DELHI HIGH COURT IS EX PARTE AND THE ORDER IN THE PRESENT CASE WAS PASSED IN THE PRESENCE OF LD. DR, IS NOT OF ANY CONSEQUENCE. IN FACT, IN THE IMPUGNED ORDER, LIBERTY HAS BEEN GIVEN TO THE DEPARTMENT TO SEEK RECALL OF THE ORDER IN CASE IT IS FOUND THAT THE TAX EFFECT IS MORE THAN RS.50 LAKHS. WE THEREFORE FIND NO MERIT IN THE STAND TAKEN BY THE ASSESSEE. 6. THE NEXT CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS WHAT HAS TO BE CONSIDERED FOR WORKING TAX EFFECT IS ONLY THE TAX AND CESS AND SURCHARGE SHOULD BE INCLUDED. ACCORDING TO HIM THEREFORE IF THE TAX EFFECT IS WORKED OUT AT 30% OF THE DISPUTED ADDITION, THE SAME COMES TO ONLY RS.48,40,270/-. HENCE, IT WAS SUBMITTED THAT THE MP SHOULD NOT BE ACCEPTED. IN THIS REGARD HE DREW OUR ATTENTION TO CBDT MP NO.60/BANG/2020 (IN IT(TP)A NO.2813/BANG/2018) PAGE 3 OF 4 CIRCULAR NO.3/2018 DATED 11.7.2018 WHEREIN THE CBDT WHILE LAYING DOWN THE TAX EFFECT FOR FILING APPEALS BEFORE TRIBUNAL HAS EXPLAINED AS TO HOW TAX EFFECT HAS TO BE CALCULATED IN PARAGRAPH-4, WHICH IS AS FOLLOWS: 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 ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). FURTHER, 'TAX EFFECT' SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST 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 ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 7. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IN THIS CASE FILED ITS RETURN OF INCOME FOR AY 2013-14 DECLARING LOSS OF RS.74,77,196 AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON A POSITIVE INCOME OF RS.86,57,034/- AFTER MAKING ADDITIONS. ACCORDING TO HIM THEREFORE THE COMPUTATION OF TAX EFFECT HAS TO BE MADE IN ACCORDANCE WITH THE LAST BUT ONE SENTENCE OF PARAGRAPH-4 (UNDERLINED AND IN BOLD LETTERS) OF THE CBDT CIRCULAR NO.3/2018 WHICH IS GIVEN IN THE EARLIER PARAGRAPH. HE POINTS OUT THAT IN THIS SENTENCE THE WORD USED IS ONLY NOTIONAL TAX ON DISPUTED ADDITION. ACCORDING TO HIM THEREFORE THE TAX EFFECT IN THE PRESENT CASE SHOULD BE DONE WITHOUT CESS AND SURCHARGE AT 30% AND NOT AT 33.99% AS MADE BY THE REVENUE. 8. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE SAME IS WITHOUT ANY MERIT. PARAGRAPH-4 OF THE CIRCULAR HAS TO BE READ AS A WHOLE. THE PURPORT OF THE CIRCULAR IS TO DECLARE THAT TAX EFFECT MEANS TAX INCLUDE CESS AND SURCHARGE BUT NOT INTEREST. THE EARLIER PART OF THE CIRCULAR DECLARES THAT THE TAX EFFECT MEANS TAX INCLUDING SURCHARGE AND CESS BUT EXCLUDING INTEREST. THE LATER PART OF THE CIRCULAR ONLY SETS OUT THREE INSTANCES OF COMPUTATION OF TAX EFFECT VIZ., (I) WHERE THE DISPUTE ITSELF IS REGARDING MP NO.60/BANG/2020 (IN IT(TP)A NO.2813/BANG/2018) PAGE 4 OF 4 CHARGEABILITY OF INTEREST; (II) WHERE THE RETURNED INCOME IS A LOSS WHICH IS CONVERTED INTO POSITIVE INCOME AND (III) CALCULATION OF TAX EFFECT IN APPEALS AGAINST LEVY OF PENALTY. THE NOTIONAL TAX IN CASE WHERE THE RETURNED INCOME IS LOSS WHICH IS REDUCED OR CONVERTED INTO POSITIVE INCOME IS ALSO TO BE CALCULATED IN ACCORDANCE WITH THE FIRST PART OF PARAGRAPH-4 OF THE CIRCULAR. THERE IS NO FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 9. KEEPING IN MIND THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ORDER DATED 28.08.2019 DISMISSING THE AFORESAID APPEAL HAS TO BE RECALLED. WE HOLD AND DIRECT ACCORDINGLY. WE ARE ALSO OF THE VIEW THAT THE ORDER OF TRIBUNAL CITED BY THE LD. COUNSEL FOR ASSESSEE IS CONTRARY TO THE LAW LAID BY HONBLE DELHI HIGH COURT (SUPRA) AND THEREFORE NOT OF ANY USE TO THE PLEA OF THE ASSESSEE. THE REGISTRY IS DIRECTED TO FIX THE APPEAL FOR HEARING IN DUE COURSE AFTER NOTICE TO THE PARTIES. 10. IN THE RESULT, THE MISCELLANEOUS PETITION BY THE REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- BANGALORE. DATED: 16.12.2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. (B. R. BASKARAN) (N. V. VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT