Case Law Details
Instruction No.1979 dated 27.3.2000, provided that no appeal would be filed before Tribunal if the tax effect was less than Rs.1.00 lacs, and thereafter Instruction dated 17.7.2003 clarified that monetary limit/tax effect mentioned in the Circular has to be read as revenue effect which would mean tax, interest, penalty. Further, vide circular dated 24.10.2005 CBDT enhanced monetary limit for filing appeal before the Tribunal to Rs.2.00 lacs and vide Instruction No.16.7.2007 it was clarified that the tax effect would mean tax only and no interest. CBDT by subsequent Instruction No.5 of 2008 dated 15.5.2008 clarified that the tax effect would also mean notional tax effect in cases of losses.
Thus, for the first time, it was made clear that even notional tax effect had to be taken into account but the instruction also made it clear that it would apply only to appeals filed after 15.5.2008 and that appeals filed prior to that date would be governed by instructions which were in operation at the time of filing of appeal. Hon’ble High Court of Delhi in the case of Continental Constructions Limited (336 ITR 394), have held that though for the purpose of monetary limit, circular issued by CBDT prescribing a particular limit would apply to all pending appeals but the notional tax effect as prescribed in the Instruction dated 15.5.2008 would be prospective and would not apply to pending appeals. Following the said judgment, the Delhi Bench of the Tribunal in case of ITO vs. Speciality Coatings & Lamination Ltd. (144 TTJ 532), has held that the real tax effect and not notional tax effect has to be taken into account while computing the monetary ceiling in respect of appeals filed prior to the issue of Instruction of 15.5.2008. The case of the assessee is identical. We have therefore to follow the decision of co-ordinate Bench of the Tribunal(supra), and respectively following the same, we dismiss both the appeals filed by the revenue as non-maintainable.
In view of the aforesaid decision of the Tribunal we are of the view that the appeals of the revenue have to be dismissed as not maintainable as the tax effect involved in these appeals were only notional as the income ultimately determined in assessment for these years was only a loss. As already observed these appeals were filed prior to 15/5/2008 from which date notional tax effect was also considered as tax effect for filing appeals. Thus these appeals are dismissed.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA NO. 850/A/2002(A.Y.1998-1999)
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