Revised tax effect for appeal applies to all pending appeals

IN THE INCOME TAX APPELLATE TRIBUNAL

(DELHI BENCH ‘F’: NEW DELHI)

SHRI I.C. SUDHIR, JUDICIAL MEMBER

and

BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER

ITA No.5117/Del./2010

(ASSESSMENT YEAR : 2006-07)

ITO, Ward 15 (1),

New Delhi.

(APPELLANT)

Vs.

M/s. R.S. Organics Pvt. Ltd.,

AD – 30A, Pitampura,

Delhi – 110 088.

(PAN: AACCR7110D)

 (RESPONDENT)

ASSESSEE BY: None

REVENUE BY: Shri Umesh Chandra Dubey, Senior DR

ORDER

PER B.C. MEENA, ACCOUNTANT MEMBER:

This appeal filed by the assessee emanates from the order of CIT (Appeals)- XVIII, New Delhi dated 24.09.2010 for the assessment year 2006-07.

2. The only issue raised by the revenue is relating to the deletion of addition of Rs.9,05,643/- made on account of excessive and unreasonable payment made to M/s. Taru Vikas Limited u/s 40A(2) of the Income-tax Act, 1961.

3. None attended on behalf of the assessee.

4. We draw the attention of the ld. DR regarding the tax effect on the deletion of addition of Rs.9,05,643/- which is less than Rs. 3.00 lakh. This position is admitted by the ld. D.R. Therefore, as per the Instruction No. 3/2011 dated 09.02.2011 the revenue is not permitted to file appeal before the Tribunal if the tax effect is less than Rs. 3.00 lakh. However, ld. DR for the revenue submitted that Instruction no. 3/2011 is not applicable for the appeals filed prior to issue of the said instructions. It is also submitted that the decision of Full Bench of Punjab & Haryana High Court in the case of CIT Vs. Virendra Construction Co., 239 CTR 1, that revised monetary limits are not applicable to the pending appeals, is in favour of the revenue.

5. We have heard ld. DR and gone through the material available on record. Instruction No. 3/2011 dated 09.02.2011 has revised the monetary limit for filing the appeal by the department before Income-tax Appellate Tribunal, Hon’ble High Courts and Hon’ble Supreme Court. Monetary limit for filing the appeal before the Tribunal is Rs. 3.00 lakh; before Hon’ble High Court Rs. 10.00 lakh and before Hon’ble Supreme Court Rs. 25.00 lakh. Hon’ble Delhi High Court in their order dated 25.03.2011 referred to above has held as under:-

“It is stated that the tax impact in the present cases is less than Rs. 10.00 lakhs. The Department has recently issued an instruction bearing no. 3/2011 dated 09.02.2011, which is identical to its earlier instruction bearing no. 5/2008 dated 15.05.2008 except that in so far as the High Court is concerned, the monetary limit in respect of appeals where the questions of law raised need not to be answered, has been raised from Rs. 4.00 lakhs to Rs. 10.00 lakhs.

The Division Bench of this Court in ITA No. 89/1999 decided on 28.01.2011 has already held that the instruction bearing no. 5/2008 dated 15.05.2008 would apply even to the old pending references and appeals. This principle would thus naturally equally apply to the instant instruction bearing no.3/2011 dated 09.02.2011, as well. The tax effect being less than Rs.10.00 lakhs, the question of law does not require to be answered. The appeals are disposed of accordingly.”

We also gone through the decision of Hon’ble Delhi High Court in the case of CIT Vs. Delhi Race Club Ltd. in ITA No. 128/2008 dated 03.03.2011 wherein it has been held as under:-

“The tax effect involved in the present appeal is Rs. 4,65,860/-. As per the recent guidelines of the CBDT, appeal in those cases where the tax effect is less than Rs. 10.00 lakhs, are not to be entertained.

This court in the case of CIT, Delhi-III Vs. M/s P.S. Jain & Co., being ITA No. 179/1991 decided on 2nd August, 2010 has taken a view that such circular would also apply to pending cases.”

5.2 In view of the decision of Hon’ble Delhi High Court, which is the jurisdictional High Court in this case, it is held that Instruction no. 3/2011 dated 09.02.2011 will apply to all pending appeals. Respectfully following the precedent, it is held that the appeal is not maintainable in the instant case as the tax effect is less than Rs. 3.00 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable.

6. In the result, appeal filed by the department is dismissed without going into the merits.

Order pronounced in open court on this 3rd day of January, 2013.

Sd/- Sd/-

(I.C. SUDHIR) (B.C. MEENA)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated the 3rd day of January, 2012/TS

Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT (A)-XVIII, New Delhi.

5. CIT (ITAT), New Delhi.

AR, ITAT

NEW DELHI.