ITO, Mohali V. M/s Binus Trading Company, Kharar

MA 71/CHANDI/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 5481 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SSH ASHOK GOYAL NIKHIL GOYAL
• Keywords: Tax effect

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER M.A. NO.71/CHD/2016 (IN ITA NO. 381/CHD/2014) ASSESSMENT YEAR: 2009-10 THE ITO, VS. M/S BINUS TRADING COMPANY, WARD 6(4), ANAJ MANDI, KHARAR, MOHALI PAN NO. AAHFB5501C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.MEENAKSHI VOHRA RESPONDENT BY : S/SH. ASHOK GOYAL/ NIKHIL GOYAL DATE OF HEARING : 08.09.2017 DATE OF PRONOUNCEMENT : 08.09.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT MISC. APPLICATION HAS BEEN MOVED BY THE DEPARTMENT FOR RECALLING OF ORDER DATED 19.4.2016 PASSED IN ITA NO . 381/CHD/2014 RELATING TO ASSESSMENT YEAR 2009-10. IT HAS BEEN P LEADED BY THE DEPARTMENT THAT THE ABOVE STATED APPEAL OF THE REVE NUE WAS DISMISSED BY THE TRIBUNAL ON THE GROUND THAT THE TAX EFFECT IN T HE APPEALS WAS LESS THAN RS. 10 LACS AND AS PER CBDT CIRCULAR NO. 21/2015 DA TED 10.12.2015, THE APPEALS WHEREIN THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMIT OF RS. 10 LACS SHOULD NOT BE FILED BY THE DEPARTMENT. THE SAI D INSTRUCTIONS OF THE CBDT HAVE BEEN MADE APPLICABLE TO THE PENDING APPEA LS ALSO. 2 2. NOW THE REVENUE HAS COME UP WITH THE PRESENT MIS CELLANEOUS APPLICATION PLEADING THAT THE TAX INCLUDES EDUCATIO N CESS ALSO. THE FOLLOWING CALCULATION OF THE TAX EFFECT HAS BEEN GI VEN BY THE REVENUE. S.NO. AMOUNT OF ADDITION DELETED TAX (@ 30%) EDUCATION CESS (@3%) OVERALL TAX EFFECT 1 RS. 6,78,848/- RS. 203654/- RS. 6610/- RS. 209764 /- 2 RS. 14,59,376/- RS. 437813/- RS. 13134/- RS. 4509 47/- 3 RS. 11,59,977/- RS. 347994/- RS. 10440/- RS. 3584 34/- TOTAL RS. 32,98,201/- RS. 9,89,461/- RS. 29,684/- R S.10,19,145/- IT HAS, THEREFORE, BEEN PLEADED THAT THE TOTAL TAX PAYABLE BY THE ASSESSEE INCLUDING EDUCATION CESS WAS MORE THAN RS. 10 LACS. HENCE, CIRCULAR NO. 21/2015 DATED 10.12.2015 OF THE CVDT WAS NOT APPLIC ABLE TO THIS APPEAL. 3. THE LD. AR OF THE ASSESSEE SHRI ASHOK GOYAL HAS PLACED ON RECORD COPY OF THE ORDER PASSED BY ITAT, CHENNAI BEN CH IN M.P. NO.155/MDS/2011 WHEREIN THE TRIBUNAL HAS CONSIDERE D A SIMILAR ISSUE. THE TRIBUNAL HAS OBSERVED THAT IN PARA-4 OF THE INSTRUCTIONS, BOARD EXPLAINED MEANING OF TAX EFFECT AND HAS PROVIDED THAT IT WOULD NOT INCLUDE INTEREST AND THE BOARD ITSELF HAS EXCL UDED INTEREST COMPONENTS FROM THE CALCULATION OF THE TAX EFFECT, AND IT DOES NOT MEAN THAT SURCHARGE WOULD BE AUTOMATICALLY INCLUDED. THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE WHERE INC LUSION OF SURCHARGE WAS SOUGHT. IT HAS BEEN PROPOUNDED IN THE ORDER THAT TAX EFFECT WILL BE CALCULATED BY EXCLUDING INTEREST AND SURCHARGE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT OTHERWISE ALSO, IT WAS A DEBATABLE ISSUE WHETHER SURCHARGE IS TO BE INCLUDED OR NOT WHICH DO ES NOT FALL WITHIN THE 3 AMBIT OF APPARENT ERROR PROVIDED U/S 254(2) OF THE INCOME TAX ACT, 1961. RELIANCE IN THIS RESPECT HAS ALSO BEEN PLACED ON TH E DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S DALLAS FINANCE LTD IN ITA NO. 3946/DELHI/2010 DATED 7.4.2017 AND THE DECI SION OF THE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S DOME BELL ELECTRONICS INDIA LTD IN ITA NO. 2480/MUMBAI/2012 VIDE ORDER D ATED 22.7.2016. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. THE ISSUE W HETHER THE TAX INCLUDES SURCHARGE AND EDUCATION CESS ALSO HAS ALRE ADY BEEN SETTLED BY VARIOUS DECISIONS OF THE TRIBUNAL AND IT HAS TIME A ND AGAIN BEEN HELD THAT THE DEFINITION OF TAX AS PROVIDED U/S 3(43) OF THE INCOME TAX ACT DOES NOT INCLUDE SURCHARGE AND EDUCATION CESS FOR THE PURPOS E OF EXAMINING THE TAX EFFECT AS ENVISAGED IN CBDT CIRCULAR NO. 21/2015 DA TED 10.12.2015. THE ITAT, CHENNAI BENCH IN THE CASE OF ACIT VS. SHRI R. VISWANATHAN, MP NO.155/MDS/2011 ORDER DATED 23 .9.2011, HAS MADE THE FOLLOWING OBSERVATIONS ON THIS SUBJECT:- 2. WE HAVE GONE THROUGH THE ORDER AND HEAR D THE RIVAL CONTENTIONS. TOTAL OF THE ADDITIONS WHICH WERE DELETED BY LD. CIT (APPEALS) IN THIS CASE WAS RS.9,67,500/-. THIS TRIBUNAL BASED ON A FINDING THAT THE TAX EFFECT WAS LESS THAN RS. 3 LAKHS, APPLYING CIRCULAR NO.5 OF 2008 DATED 1 5.5.2008, HAD DISMISSED THE APPEAL OF THE REVENUE. NOW, AS PER LEARNED D.R., THE TAX EFFECT OF RS. 9,67,500/- WOULD B E RS.3,19,277/-. ACCORDING TO HIM, THIS AMOUNT WAS ARRIVED AT BASED ON 30% TAX SLAB AGGREGATED WITH SURCHARGE OF 10% VIZ., RS.2,90,250/- AND RS.29,025/-RESPECTIVELY. 3. WE FIND THAT IN CLAUSE (4) OF INSTRUCTIO N NO.5 OF 2008 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 I SSUE 4 AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON. SIMILARLY, IN LOSS CASES NOTIONAL TA X EFFECT SHOULD BE TAKEN INTO ACCOUNT. IN THE CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUAN TUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST.' NOTHING HAS BEEN MENTIONED IN THE ABOVE DEFI NITION TO SHOW THAT TAX WILL INCLUDE SURCHARGE FOR THE PURPO SE OF APPLYING THE SAID CIRCULAR. NOW IF WE LOOK AT THE DE FINITION OF 'TAX' AS PER SUB-SECTION (43) OF SECTION 2OF INCOME-TA X ACT, 1961, IT RUNS AS UNDER:- '(43) 'TAX' IN RELATION TO THE ASSESSMENT YE AR COMMENCING ON THE 1ST DAY OF APRIL, 1965, AND AN Y SUBSEQUENT ASSESSMENT 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 O F THIS ACT PRIOR TO THE AFORESAID DATE [AND IN RELATI ON TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2006, AND ANY SUBSEQUENT ASSESSMENT YEAR INCLUDES THE FRINGE BENEFIT T AX PAYABLE UNDER SECTION 115WA]' IT IS CLEAR THAT TAX, AS PER THE ABOVE DEFINITION, WOULD INCLUDE SUPER-TAX AND ALSO FRINGE BENEFIT TAX BUT NOT SURCH ARGE. ADMITTEDLY, HERE, THE TAX WAS ONLY RS. 2,90,250/-WH ICH IS BELOW THE LIMIT OF RS.3 LAKHS PRESCRIBED IN THE CIRCULAR FOR FILING APPEALS BEFORE THIS TRIBUNAL. RESULTANTLY, WE D O NOT FIND ANY MISTAKE IN THE ORDER OF THIS TRIBUNAL MUCH LESS ANY MISTAKE APPARENT ON RECORD. 5. THERE IS NO DISPARITY ON FACTS. EVEN SIMILAR OBSERVATIONS HAVE BEEN MADE BY DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S DALLAS FINANCE LTD (SUPRA) AND BY MUMBAI BENCH OF THE TRI BUNAL IN DCIT VS. M/S DOME BELL ELECTRONICS INDIA LTD (SUPRA). RESPE CTFULLY FOLLOWING 5 DECISIONS OF COORDINATE BENCHES OF THE TRIBUNAL, WE DO NOT FIND ANY APPARENT ERROR IN THE IMPUGNED ORDER, AND REJECT T HE MA OF THE REVENUE. 6. IN THE RESULT, MISC. APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.09.2017 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.09.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR