ITO, Ward-6(4),Hyd, Hyderabad V. P Prasen Kumar, Hyd, Hyderabad

MA 63/HYD/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5116 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Tax effect
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. NO. 63/HYD/2016 (IN ITA NO. 418/HYD/2014 ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, WARD 6(4), HYDERABAD VS. P. PRASEN KUMAR, HYDERABAD. PAN AGWPP0903H (APPLICANT) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI P. MURALI MOHAN RAO DATE OF HEARING : 18-11-2016 DATE OF PRONOUNCEMENT : 07-12-2016 O R D E R PER B. RAMAKOTAIAH, A.M.: THIS M.A. PREFERRED BY THE ASSESSING OFFICER AGAIN ST THE ORDER OF ITAT IN ITA NO. 418/HYD/2014, DATED 22/12/2015. 2. REVENUE IN APPEAL IN THIS CASE TREATED AS WITHDR AWN/NOT PRESSED FOLLOWING CBDTS CIRCULAR NO. 21/2015 DATED 10/12/2015 AS MANDATORY LIMIT FOR PREFERRING APPEAL OF RS. 10 LAK HS WAS NOT FULFILLED IN THIS CASE. 3. IN THE M.A. , THE ASSESSING OFFICER CONTENDS THA T TAX PAID IN THIS APPEAL IS RS. 10,19,700/-, WHICH IS MORE THAN THE M ANDATORY LIMIT OF RS. 10 LAKHS. 4. LD. COUNSEL ON THE OTHER HAND PLACED ON RECORD T HE WORKING OF THE TAX EFFECT AS UNDER: 2 M.A. 63/H/16 P. PRASEN KUMAR, HYD. STATEMENT SHOWING CALCULATION OF DISPUTED TAXES AND EDUCATION CESS PARTICULARS AMOUNT (RS.) AMOUNT OF ADDITION INVOLVED IN DEPARTMENTAL APPEAL 30,00,000 TAX THEREON @ 30% 9,00,000 ADD: SURCHARGE @ 10% 90,000 TOTAL TAXES INCLUDING SURCHARGE 9,90,000 ADD: EDUCATION CESS 29,700 TOTAL TAXES INCLUDING SURCHARGE 10,19,700 4.1 IT WAS SUBMITTED THAT FOR THE PURPOSE OF WORKIN G OUT TAX EFFECT, SURCHARGE OF RS. 90,000/- AND EDUCATION CESS AT RS. 29,700/- SHOULD BE EXCLUDED. IN THIS CONNECTION, LD. COUNSEL HAS PL ACED ON RECORD THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DALMIA CEMENT (BHARAT) LTD. VS. CIT, [2013] 36 TAXMANN.COM 358 (D ELHI) TO SUBMIT THAT UNDER THE PROVISIONS OF SECTION 43B CESS COLLE CTED DID NOT BECOME PART OF TAX, AS ESSENTIAL FEATURE OF TAX WAS NOT EXISTENT. HE FURTHER PLACED ON RECORD THE DECISION OF THE COORDI NATE BENCH AT LUCKNOW IN THE CASE OF YUVRAJ SINGH IN ITA NO. 408/ LKW/2011 AND CO NO. 29/LKW/2011, ORDER DATED 23/12/2013 ON A SIM ILAR ISSUE WHEN THE LIMIT WAS AT RS. 3 LAKHS. IN THE SAID CASE , THE COORDINATE BENCH HAS HELD THAT FOR THE PURPOSE OF DECIDING APP LICABILITY OF BOARDS INSTRUCTION, TAX EFFECT SHOULD BE WORKED OU T WITHOUT INCLUDING CESS AND, THEREFORE, IN THE PRESENT CASE, THE PRESE NT APPEAL OF THE REVENUE IS HIT BY THE BOARDS INSTRUCTION. LD. COUN SEL FOR THE ASSESSEE HAS PLACED ON RECORD ANOTHER DECISION OF T HE COORDINATE BENCH AT CHENNAI A BENCH IN THE CASE OF ACIT VS. SHRI R. VISWANATHAN IN M.P. NO. 155/MDS/2011, DATED 23/09/2 011, WHEREIN BY REFERRING TO SECTION 2(43) ABOUT DEFINITION OF TAX, IT WAS HELD THAT TAX AS PER THE DEFINITION WOULD INCLUDE SUPER TAX A ND ALSO FRINGE BENEFIT TAX, BUT, NOT SURCHARGE. IN VIEW OF THE ABO VE, IT WAS SUBMITTED THAT TAX EFFECT HAS TO BE CALCULATED ONLY ON THE TA X PART EXCLUDING SURCHARGE AND CESS. LD. COUNSEL ALSO HAS PLACED ON RECORD A RECENT ORDER OF ITAT, MUMBAI D BENCH IN THE CASE OF DCI T VS. M/S DOME 3 M.A. 63/H/16 P. PRASEN KUMAR, HYD. BELL ELECTRONICS, IN ITA NO. 2480/MUM/2012, ORDER D ATED 22/07/2016, FOR SIMILAR INTERPRETATION. 5. LD. DR, HOWEVER, RELIED ON THE ORDER OF ASSESSIN G OFFICER TO SUBMIT THAT TAX INCLUDE SURCHARGE AND CESS. 6. WE HAVE CONSIDERED THE ISSUE. AS FAR AS THE DEFI NITION OF TAX IS CONCERNED, THE TAX DOES NOT INCLUDE SURCHARGE AND CESS AS PER THE ABOVE REFERRED CASES. THE COORDINATE BENCH IN THE C ASE OF DCIT VS. DOME BELL ELECTRONICS (SUPRA) HAS CONSIDERED THIS I SSUE VIDE PARA 3.2 OF ITS ORDER, WHICH IS AS UNDER: 3.2. WE HAVE GONE THROUGH THE FACTS OF THIS CASE A ND ALSO GONE THROUGH THE AFORESAID CIRCULAR AS WELL AS SUB-SECTI ON (43) OF SECTION 2 OF THE ACT WHICH DEFINES WORD 'TAX'. IT I S NOTED THAT 3 DOME BELL ELECTRONICS THE IDENTICAL ISSUE CAME UP B EFORE THE HON'BLE CHENNAI BENCH WHEREIN HON'BLE BENCH HELD AS UNDER: 'WE FIND THAT IN CLAUSE (4) OF INSTRUCTION NO.5 OF 2008 DATED 15TH MAY, 2008 OF CBDT, TAX EFFECT IS DEFINED AS UNDER:- '4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFER ENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX TH AT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WH ICH APPEAL IS INTENDED TO BE FILED (HEREAFTER REFERRED TO AS 'DIS PUTED ISSUES'). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THER EON. SIMILARLY, IN LOSS CASES NOTIONAL TAX EFFECT SHOULD BE TAKEN I NTO ACCOUNT. IN THE CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEA N QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEA LED AGAINST.' NOTHING HAS BEEN MENTIONED IN THE ABOVE DEFINITION TO SHOW THAT TAX WILL INCLUDE SURCHARGE FOR THE PURPOSE OF APPLY ING 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 COMM ENCING ON THE 1ST DAY OF APRIL, 1965, AND ANY SUBSEQUENT ASSESSME NT YEAR MEANS INCOME-TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT, AND IN RELATION TO ANY OTHER ASSESSMENT YEAR INCOME -TAX AND SUPER-TAX CHARGEABLE UNDER THE PROVISIONS OF THIS A CT PRIOR TO THE AFORESAID DATE [AND IN RELATION TO THE ASSESSMENT Y EAR COMMENCING ON THE 1ST DAY OF APRIL, 2006, AND ANY S UBSEQUENT 4 M.A. 63/H/16 P. PRASEN KUMAR, HYD. ASSESSMENT YEAR INCLUDES THE FRINGE BENEFIT TAX PAY ABLE UNDER SECTION 115WA]' IT IS CLEAR THAT TAX, AS PER THE ABOVE DEFINITION, WOULD INCLUDE SUPERTAX AND ALSO FRINGE BENEFIT TAX BUT NOT SURCHA RGE. ADMITTEDLY, HERE, THE TAX WAS ONLY RS. 2,90,250/- W HICH IS BELOW THE LIMIT OF RS. 3 LAKHS PRESCRIBED IN THE CIRCULAR FOR FILING APPEALS BEFORE THIS TRIBUNAL. RESULTANTLY, WE DO NO T 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 SECT ION 2 WHICH DEFINES 'TAX'. THE PERUSAL OF THE DEFINITION SHOWS THAT WHATEVER WAS INTENDED TO BE INCLUDED IN TAX HAS BEEN MENTION ED THEREIN. WHEN THE LEGISLATURE HAS MENTIONED THE WORDS 'SUPER -TAX' AND 'FRINGE BENEFIT TAX', THEN, IT COULD HAVE ALSO MENT IONED THE WORDS 'SURCHARGE' 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 INCLUDE I N WORD 'TAX' FOR THE PURPOSE OF EXAMINING OF TAX EFFECT AS ENVIS AGED IN CIRCULAR OF BOARD DATED 10 TH DECEMBER 2015 NO. 21/2015. THUS, THE TAX EFFECT BEING LESS THAN 10 LAKHS, IMPUGNED A PPEAL 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 CEME NT (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 AR E OF THE OPINION THAT THERE IS NO MERIT IN THE MA FILED BY THE REVEN UE. 7. EVEN THOUGH THE LEARNED COUNSEL, IN THIS CASE, O BJECTED TO FILING THE MA BELATEDLY BY THE REVENUE, IN VIEW OF THE REV ISED PROVISIONS, WE ARE NOT CONSIDERING IT AS THE SAME WILL BE DEALT SE PARATELY, AS THERE IS NO MERIT IN THE MA ON THE TAX EFFECT. 5 M.A. 63/H/16 P. PRASEN KUMAR, HYD. 8. IN THE RESULT, MA FILED BY THE REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER, 2016. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 7 TH DECEMBER, 2016 KV COPY TO:- 1) ITO, WARD 6(8), HYDERABAD 2) SHRI PRASEN KUMAR, 8-3-1027/2/D, PLOT NO. 153, S RINAGAR COLONY, HYDERABAD 3) CIT(A) - VIJAYAWADA 4 CIT II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE