Income Tax Officer TDS Ward-3(3), Bangalore V. M/s The Coffee Board Employees Co-op Housing Society Limited , Bangalore

MA 8/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8790 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDINI DAS
• Assessee Lawyers: ARVIND V CHAVAN
• Keywords: Tax effect; Benefit of exemption; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER M.P. NOS. 8 & 19/BANG/2019 (IN ITA NO S . 1370 & 1371 /BANG/2017) ASSESSMENT YEAR S : 2012 - 13 & 2013 - 14 THE INCOME TAX OFFICER, TDS WARD 3 (3), BANGALORE. VS. M/S. COFFEE BOARD EMPLOYEES COOP HOUSING SOCIETY LTD., NO. 1, DR. AMBEDKAR VEEDHI, BANGALORE 560 001. PAN: AACCT1199E APPELLANT RESPONDENT ASSESSEE BY : SHRI ARVIND V. CHAVAN, ADVOCATE R EVENUE BY : SMT. NANDINI DAS, ADDL. CIT (DR) DATE OF HEARING : 29 .0 3 .2019 DATE OF PRONOUNCEMENT : 05 .0 4 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THESE TWO M.PS. ARE FILED BY THE REVENUE AND IT IS STATED IN THESE M.PS. THAT THE ORDER OF CIT (A) IS A COMPOSITE ORDER FOR THREE YEARS AND THEREFORE, AS PER PARA 5 OF CIRCULAR NO. 21/2015 DATED 20.12.2015, IN WHICH IT IS SPECIFIED THAT IF THE TAX EFFECT IS MORE IN ANY ONE OR MORE YEARS AND THE APPEAL IS FILED FOR THAT YEAR THEN THE APPEAL SHOULD BE FILED IN THAT YEAR ALSO WHERE THE TAX EFFECT IS LOW. 2. IN COURSE OF HEARING BEFORE US, IT WAS SUBMITTED BY LD. DR OF REVENUE THAT IN THE PRESENT CASE, THE ORDER OF CIT(A) IS A COMPOSITE ORDER FOR THREE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2011-12, 2012-13 AND 2013-14 AND TAX EFFECT IN ASSESSMENT YEAR 2011-12 IS MORE THAN RS. 20 LAKHS BEING RS. 20,44,999/- AND THEREFORE, REVENUES APPEAL SHOULD BE ADMITTED FOR ASSESSMENT YEARS 2012-13 AND 2013-14 ALSO ALTHOUGH THE TAX EFFECT IN THESE TWO YEARS IS BELOW RS. 20 LAKHS OF RS. 15,97,350/- FOR ASSESSMENT YEAR 2012-13 AND RS. 12,18,500/- FOR ASSESSMENT YEAR 2013-14. AS AGAINST THIS, THE LD. AR OF ASSESSEE PLACED RELIANCE ON TRIBUNAL ORDER RENDERED IN THE CASE OF ACIT VS. VALMARK DEVELOPERS PVT. LTD. IN ITA NOS. M.P. NOS. 8 & 19/BANG/2019 (IN ITA NOS. 1370 & 1371/BANG/2017) PAGE 2 OF 6 2648 TO 2653/BANG/2017 DATED 11.04.2018. HE SUBMITTED THAT IN THIS CASE ALSO, THE REVENUE PLACED RELIANCE ON SAME CBDT CIRCULAR NO. 21/2015 DATED 20.12.2015. BUT THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. PSI HYDRAULICS AS REPORTED IN (2014) 226 TAXMAN 34 (KAR) AND HELD THAT THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE BECAUSE OF LOW TAX EFFECT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FOR READY REFERENCE, WE REPRODUCE PARAS 2 TO 6 OF THIS TRIBUNAL ORDER. THESE PARAS ARE AS UNDER. 2. THE LD DR HOWEVER SUBMITTED THAT PARA 5 OF THE AFORESAID CIRCULAR WHICH READS AS FOLLOWS:- 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS THAN THE PRESCRIBED OF THE YEAR(S) IN WHICH THE 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY.' 3. ACCORDING TO THE LEARNED DR, IF THE ORDER OF THE CIT(A) IS A COMPOSITE ORDER INVOLVING MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR ARE INVOLVED APPEAL CAN BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED LIMIT FOR SOME OF THE ASSESSMENT YEARS COMPRISED IN THE COMPOSITE ORDER OF THE APPELLATE AUTHORITY. THE LEARNED DR POINTED OUT THAT THE CIT(A) IN THE PRESENT CASE HAS PASSED A COMMON ORDER FOR SEVERAL AYS AND TAX EFFECT IN ONE OF THE AY I.E., AY 13-14 IS MORE THAN RS.10 LACS AND THEREFORE THE APPEALS FOR ALL THE AYS SHOULD BE HELD TO BE FALLING WITHIN THE EXCEPTION CONTAINED IN PARAGRAPH 5 OF THE CIRCULAR REFERRED TO ABOVE. 4. THE LD COUNSEL FOR THE ASSESSEE, HOWEVER, POINTED OUT THAT PARAGRAPH 5 OF THE CIRCULAR ON WHICH THE LD DR PACED RELIANCE IN SUPPORT OF HIS CONTENTION THAT THE APPEALS OF THE REVENUE ARE NOT HIT BY THE CIRCULAR NO.21/2015 IS SIMILAR TO PARAGRAPH 5 ISSUED BY THE M.P. NOS. 8 & 19/BANG/2019 (IN ITA NOS. 1370 & 1371/BANG/2017) PAGE 3 OF 6 CBDT VIZ., CIRCULAR NO.3/2012 WHICH WAS THE CIRCULAR ISSUED BY THE CBDT PRESCRIBING MONETARY LIMITS FOR FILING APPEALS BEFORE TRIBUNAL. THIS CIRCULAR WAS IN FORCE PRIOR TO THE ISSUANCE OF CBDT CIRCULAR NO.21/2015. HE BROUGHT TO OUR NOTICE THAT PARAGRAPH 5 OF CBDT CIRCULAR NO.3/2012 HAD COME UP FOR CONSIDERATION BEFORE THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT, CENTRAL CIRCULAR VS. PSI HYDRAULICS (2014) 226 TAXMAN 34 (KAR). IN THE AFORESAID DECISION, HONBE KARNATAKA HIGH COURT HELD MERELY BECAUSE THE ORDER OF THE CIT(A) IS CONSOLIDATED ORDER PASSED FOR SEVERAL YEARS TAX EFFECT SHOULD NOT BE SEEN FOR EACH AY SEPARATELY. THE HONBLE KARNATAKA HIGH COURT HELD THAT PARAGRAPH 5 OF CIRCULAR NO.3/2013 WAS DISCRIMINATORY AND OFFENDED ARTICLE 14 OF THE CONSTITUTION OF INDIA. THE HONBLE HIGH COURT FINALLY HELD THAT EVEN THOUGH THE CUMULATIVE TAX EFFECT IN A COMMON ORDER PASSED BY CIT(A) FOR SEVERAL YEARS IS MORE THAN 10 LAKHS BUT IF THE INDIVIDUAL TAX EFFECT IN EACH ASSESSMENT YEAR IS LESS THAN THE MONETARY LIMIT PRESCRIBED IN CIRCULAR NO.3/2011, THE SAME SHOULD BE HELD TO BE NOT MAINTAINABLE. HE THEREFORE SUBMITTED THAT THE TAX EFFECT FOR EACH AY SHOULD BE SEEN SEPARATELY AND IN THAT EVENT THE APPEALS FOR THE OTHER AYS EXCEPT AY 2013-14, WOULD BE NOT MAINTAINABLE AS THE TAX EFFECT WAS ADMITTEDLY LESS THAN RS.10 LACS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IS DIRECTLY ON THE POINT AND WAS RENDERED IN IDENTICAL CIRCUMSTANCES. PARA 5 OF THE CIRCULAR NO.3/2011 CONSIDERED BY THE HONBLE KARNATAKA HIGH COURT IS IN PARI MATERIA SAME AS PARA 5 OF CIRCULAR NO.21/20115. FOR THE SAKE OF READY REFERENCE, WE GIVE BELOW THE RELEVANT PARAGRAPHS OF HONBLE KARNATAKA HIGH COURT ON THIS ISSUE. ....PER CONTRA, SRI K.V. ARAVIND, LEARNED COUNSEL FOR THE APPELLANTS REFERS TO PARA 5 OF CIRCULAR NO. 3/2011, WHICH READS THUS:- 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS THAN THE PRESCRIBED OF THE YEAR(S) IN WHICH THE 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT M.P. NOS. 8 & 19/BANG/2019 (IN ITA NOS. 1370 & 1371/BANG/2017) PAGE 4 OF 6 PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY.' 17. IN CASE OF AN ASSESSEE, WHERE COMMON ORDER IS PASSED IN RESPECT OF MORE THAN ONE ASSESSMENT YEAR, WHICH INVOLVES COMMON ISSUES EVEN IF IN ONE OF THE ASSESSMENT YEARS THE TAX EFFECT IS MORE THAN RS. 10 LAKHS, IRRESPECTIVE OF THE FACT THAT IN RESPECT OF OTHER ASSESSMENT YEARS WHICH IS PART OF THE COMMON ORDER, THE TAX EFFECT IS LESS THAN RS. 10 LAKHS, THE REVENUE IS ENTITLED TO FILE APPEAL EVEN IN RESPECT SUCH ASSESSMENT YEARS WHERE THE TAX EFFECT IS LESS THAN RS. 10 LAKHS. HOWEVER, IN CASE WHERE THERE IS NO COMMON ORDER AND AN ORDER IS PASSED ONLY IN RESPECT OF AN ASSESSMENT, YEAR AND THE TAX EFFECT THEREIN IS LESS THAN RS. 10 LAKHS, THE REVENUE CANNOT FILE THE APPEAL. 18. ON THOROUGH SCRUTINY OF PARA 5 OF THE CIRCULAR NO. 3/2011, WE FIND THAT THERE APPEARS TO BE A GLARING DISCRIMINATION OFFENDING THE SPIRIT OF ARTICLE 14 OF THE CONSTITUTION. IN THE CASE OF A COMMON ORDER PASSED IN RESPECT OF ONE OR MORE ASSESSMENT YEAR/YEARS, IF THE TAX EFFECT IS LESS THAN RS. 10 LAKHS, THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF EXEMPTION AND THE REVENUE IS NOT DEBARRED FROM FILING AN APPEAL, EVEN THOUGH THE TAX EFFECT IN RESPECT OF ONE OR MORE ASSESSMENT YEARS IS LESS THAN RS. 10 LAKHS. IN OTHER WORDS, THE REVENUE CAN FILE AN APPEAL AGAINST ALL THE ASSESSMENT ORDERS WHICH IS A PART OF THE COMMON ORDER, IRRESPECTIVE OF THE FACT, WHETHER FOR ONE OF THE ASSESSMENT YEAR/YEARS, THE TAX EFFECT IS LESS THAN RS. 10 LAKHS. HOWEVER, IF IT IS A SOLITARY ORDER AND TAX EFFECT IS LESS THAN RS. 10 LAKHS, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION AND THE REVENUE CANNOT FILE THE APPEAL. 19. THE PARA-5 OF THE CIRCULAR IS HIGHLY DISCRIMINATORY. AFTER ALL THE BUNCHING AND CLUBBING OF CASES AND PASSING COMMON ORDERS IS A PROCEDURE ADOPTED FOR CONVENIENT DISPOSAL OF THE CASES BY THE COURT OR QUASI JUDICIAL AUTHORITY. THE ASSESSEE HAS NO SAY IN THE MATTER OF CLUBBING OF CASES AND PASSING OF COMMON ORDERS. MERELY BECAUSE THE AUTHORITY CONCERNED FOR JUDICIAL CONVENIENCE, CLUBS THE CASES AND PASS COMMON ORDER, THE ASSESSEE SHOULD NOT BE DENIED OF THE BENEFIT OF CIRCULAR-3/2011 WHEN THE TAX EFFECT FOR THE ASSESSMENT YEAR/YEARS THE TAX EFFECT IS LESS THAN RS. 10 LAKHS. THEREFORE, IT IS TO BE HELD THAT WHETHER IT IS A SOLITARY ORDER OR COMMON ORDER, THE ASSESSEE SHOULD HAVE THE BENEFIT OF THE TAX EFFECT LESS THAN RS. 10 LAKHS AND IN ALL SUCH CASES WHETHER IT IS A PART OF THE COMMON ORDER OR A SOLITARY ORDER, THE REVENUE WILL NOT BE ENTITLED TO FILE AN APPEAL. (EMPHASIS SUPPLIED) 6. IN VIEW OF THE AFORESAID DECISION OF HONBLE KARNATAKA HIGH COURT, WE HOLD THAT THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-10 TO 2012-13 BEING ITA NO.2648 TO 2651 AND FOR ASSESSMENT YEAR 2014-15 BEING ITA 2653/B/2017 ARE DISMISSED FOR REASON THAT THE TAX EFFECT IN THESE APPEALS ARE LESS THAN RS.10 LAKHS AND, THEREFORE, SUCH APPEALS M.P. NOS. 8 & 19/BANG/2019 (IN ITA NOS. 1370 & 1371/BANG/2017) PAGE 5 OF 6 ARE NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO.21/2015. 4. FROM THE ABOVE PARAS REPRODUCED FROM THE TRIBUNAL ORDER, IT IS SEEN THAT IN THAT CASE ALSO, RELIANCE WAS PLACED BY LD. DR OF REVENUE ON SAME CBDT CIRCULAR NO. 21/2015 DATED 20.12.2015. BUT THE TRIBUNAL HAS FOLLOWED THE BINDING JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. PSI HYDRAULICS (SUPRA) IN WHICH IT WAS HELD THAT AO HAS TO CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE APPEAL OF THE REVENUE. HON'BLE KARNATAKA HIGH COURT HAS HELD THAT PARA 5 OF THIS CIRCULAR IS HIGHLY DISCRIMINATORY BECAUSE ALL THE BUNCHING AND CLUBBING OF CASES AND PASSING COMMON ORDERS IS A PROCEDURE ADOPTED FOR CONVENIENT DISPOSAL OF THE CASES BY THE COURT OR QUASI JUDICIAL AUTHORITY AND THE ASSESSEE HAS NO SAY IN THE MATTER OF CLUBBING OF CASES AND PASSING OF COMMON ORDERS AND MERELY BECAUSE THE AUTHORITY CONCERNED FOR JUDICIAL CONVENIENCE, CLUBS THE CASES AND PASS COMMON ORDER, THE ASSESSEE SHOULD NOT BE DENIED OF THE BENEFIT OF CIRCULAR- 3/2011 WHEN THE TAX EFFECT FOR THE ASSESSMENT YEAR/YEARS IS LESS THAN RS. 10 LAKHS. WITH THIS READING, IT WAS HELD THAT WHETHER IT IS A SOLITARY ORDER OR COMMON ORDER, THE ASSESSEE SHOULD HAVE THE BENEFIT OF THE TAX EFFECT LESS THAN RS. 10 LAKHS IN ALL SUCH CASES WHETHER IT IS A PART OF THE COMMON ORDER OR A SOLITARY ORDER, THE REVENUE WILL NOT BE ENTITLED TO FILE AN APPEAL. THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT PARA 5 OF CIRCULAR NO. 3/2011 CONSIDERED BY HON'BLE KARNATAKA HIGH COURT IS IN PARI MATERIA SAME AS PARA 5 OF CIRCULAR NO. 21/2015. HENCE WE FIND NO MERIT IN THESE TWO M.PS. FILED BY THE REVENUE. 5. IN THE RESULT, BOTH THE M.PS. FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 05 TH APRIL, 2019. /MS/ M.P. NOS. 8 & 19/BANG/2019 (IN ITA NOS. 1370 & 1371/BANG/2017) PAGE 6 OF 6 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.