Tax effect is less than 60 Lakh in appeal by revenue: ITAT held not maintainable

DCIT Vs Coforge Ltd. (ITAT Delhi)

Appeal was filed by revenue for AY 2016-17 against order passed by CIT (A) who deleted the adjustment of Rs.  1,18,14,779/- on account of interest charged on outstanding receivable from the AEs to the income of the assessee even when the provisions of section 92B have been amended by The Finance Act, 2012 with retrospective amendment from 01.04.2002.

It was submitted of behalf of assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.09 of 2024 dated 17.09.2024 revising the previous thresholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be dismissed in limine. On the other hand, revenue fairly admitted applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, appeal of the Revenue is dismissed as not maintainable.

FULL TEXT OF THE ORDER OF ITAT DELHI

The captioned appeal has been filed at the instance of the Revenue against the order of the Ld. CIT(A)-44 [“Ld. CIT(A)”], dated 07.03.2022 concerning assessment year 2016-17.

2. The grounds of appeal raised by the Revenue read as under:-

1.“On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in deleting the adjustment of Rs. – 1,18,14,779/on account of interest charged on outstanding receivable from the AEs to the income of the assessee even when the provisions of section 92B have been amended by The Finance Act, 2012 with retrospective amendment from 01.04.2002.

2. On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in holding that interest on receivables from AEs con not be charged if the margin of the assessee is better than that of comparables after allowing working capital adjustment ignoring the fact that the receivables were outstanding beyond agreed term.

3. On the facts & under the circumstances the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on disallowance u/s 14A ignoring the fact that the assessee failed to prove that investment resulting in exempt income were made out of own funds and not from interest bearing borrowed funds.”

3. At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.09 of 2024 dated 17.09.2024 revising the previous thresholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be dismissed in limine.

4. The Ld. CIT.DR for the Revenue fairly admitted applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, appeal of the Revenue is dismissed as not maintainable. However, it will be open to the Revenue to seek foresaid restoration of its appeal on showing inapplicability of the a CBDT Circular in any manner.

5. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open Court on 20^th November, 2024.