ITO Vs Rainbow Diamonds Pvt. Ltd. (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, dismissed the Revenue’s appeal for Assessment Year 2017-18 on the ground of low tax effect under CBDT Circular No. 09/2024 | Dated: 17th September, 2024 The appeal arose from an order of the Commissioner of Income Tax (Appeals), NFAC, which had deleted an addition of Rs.79.75 lakh made by the Assessing Officer.
Before the Tribunal, the assessee submitted that the actual tax effect in the matter was below the monetary threshold limit of Rs.60 lakh prescribed for filing appeals before the Tribunal. According to the assessee, the Assessing Officer had computed the tax effect at Rs.61.60 lakh by including Education Cess at 3%. It was argued that if Education Cess was excluded, the tax effect would come to Rs.59.81 lakh. The assessee relied on a Hyderabad Tribunal decision, which in turn relied upon the Delhi High Court judgment in Dalmia Cement (Bharat) Ltd. vs. CIT, holding that Education Cess is not part of tax.
The Revenue argued that Education Cess forms part of tax and was correctly included while calculating the tax effect.
After hearing both sides, the Tribunal noted that CBDT Circular No. 09/2024 | Dated: 17th September, 2024 revised the monetary limit for filing appeals before the Tribunal to Rs.60 lakh and clarified that the circular applies to pending appeals as well. The Tribunal held that the present appeal was not maintainable due to low tax effect.
