The ACIT, Central Circle-1(4),, Ahmedabad v. New Ahmedabad Synthetics Pvt. Ltd., New Delhi

ITA 962/AHD/2010 | 2006-2007
Pronouncement Date: 06-08-2010 | Result: Dismissed

Appeal Details

RSA Number 96220514 RSA 2010
Assessee PAN AAACN6720B
Bench Ahmedabad
Appeal Number ITA 962/AHD/2010
Duration Of Justice 4 month(s) 5 day(s)
Appellant The ACIT, Central Circle-1(4),, Ahmedabad
Respondent New Ahmedabad Synthetics Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 06-08-2010
Date Of Final Hearing 06-08-2010
Next Hearing Date 06-08-2010
Assessment Year 2006-2007
Appeal Filed On 31-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MAHAVIR SINGH JUDICIAL MEMBER) ITA.NO.962/AHD/2010 [ASSTT. YEAR : 2006-2007] ACIT CENT.CIR.1(4) AHMEDABAD. VS. NEW AHMEDABAD SYNTHETICS PVT. LTD. 417 KUCHA BRIJNATH CHANDNI CHOWK NEW DELHI 110 006. PAN : AAACN 6720 B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.MADHU SUDAN ASSESSEE BY : SHRI D.K. PARIKH O R D E R PER G.D. AGRAWAL VICE-PRESIDENT: THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XI AHMEDA BAD DATED 26.02.2010 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. 2. IN THE APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN GRA NTING RELIEF ON ACCOUNT OF DISALLOWANCE U/S.14A OF RS.1 06 119/- WHERE IT HAD FAILED TO PROVE THAT THE INVESTMENT IN SHARES WAS MADE OUT OF INTEREST FREE FUND. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN G RANTING RELIEF ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF DIRECTORS REMUNERATION OF RS.5 124 400/- 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSES SEE DRAWN OUR ATTENTION TO THE STATEMENT FILED BY THE ASSESSEE SHOWING THE CALCULA TION OF TAX EFFECT ON THE ADDITIONS MADE BY THE AO AND SUBMITTED THAT THE TAX EFFECT O N THE SAID ADDITION IS BELOW RS. 2 LAKHS AND THEREFORE FOLLOWING THE CBDT CIRCULARS RE STRICTING THE FILING OF THE APPEAL BY THE REVENUE THE PRESENT APPEAL OF THE REVENUE SHOU LD BE DISMISSED IN LIMINE . ITA.NO.962/AHD/2010 2 4. THE LD. DEPARTMENTAL REPRESENTATIVE WAS ASKED WH Y THE APPEAL OF THE REVENUE SHOULD NOT BE TREATED AS UN-ADMITTED IN VIEW OF CIR CULAR F.NO.279/MISC.-64/05-ITJ DATED 24TH OCTOBER 2005 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CAMCO COLOUR CO. [254 ITR 565 (BOM)] AND TH E HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATI ON LTD. [267 ITR 272 (SC)]. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RANI PALIWAL VS. C.I.T. [268 I .T.R. 220] AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE ARORA VS. DCIT [269 I. T.R. 133] HAVE TAKEN THE VIEW THAT ONCE AN APPEAL IS FILED BY THE REVENUE THE TRIBUNA L SHOULD DISPOSE OF THE APPEAL ON MERITS AND THE ASSESSEE CANNOT RAISE THE OBJECTION AGAINST THE MAINTAINABILITY OF SUCH APPEAL. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF TH E LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFO RE US. WE FIND THAT THE CBDT VIDE INSTRUCTION NO.2/2005 DATED 24TH OCTOBER 2005 ISSU ES GUIDELINES TO THE REVENUE AUTHORITIES WITH REGARD TO FILING OF APPEAL BEFORE THE TRIBUNAL HIGH COURT AND SUPREME COURT. FROM THE ABOVE INSTRUCTION IT IS EVIDENT TH AT SINCE 1987 THE CBDT IS INSTRUCTING ITS OFFICERS NOT TO FILE THE APPEAL WHERE THE TAX E FFECT IS BELOW CERTAIN MONETARY LIMITS. VIDE INSTRUCTION NO. 1903 DATED 28TH OCTOBER 1992 THE MONETARY LIMIT WAS REVISED UPWARD AND THE OFFICERS WERE DIRECTED NOT TO FILE T HE APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL WHERE THE TAX EFFECT WAS BELOW R S.25 000/-. THE ABOVE MONETARY LIMIT WAS FURTHER REVISED UPWARD BY INSTRUCTION NO. 1979 DATED 27TH MARCH 2000 AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL TO IT AT WHERE THE TAX EFFECT IS BELOW RS.1 LAC. THEREAFTER IN PARTIAL MODIFICATION OF THE ABO VE INSTRUCTION THE BOARD VIDE INSTRUCTION NO.2/2005 DATED 24.10.2005 HAS FURTHER RAISED THE A BOVE MONETARY LIMIT TO RS. 2 LAKHS WITH THE SAME DIRECTIONS. THUS THE CBDT SINCE 198 7 HAS NOT ONLY TAKEN A CONSISTENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT IS BELOW THE MONETARY LIMIT BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWARD FROM TIME TO TIME. THE CIRCULAR UNDER INSTRUCTION NO.1979 DATED 27.3.2000 WAS CONSIDERED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. (SUPRA) AND T HEIR LORDSHIPS HELD AT PAGE 568 AS UNDER :- ITA.NO.962/AHD/2010 3 IT APPEARS THAT DESPITE THE ABOVE CIRCULAR THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWING FULLY WELL THAT THE CORRIDOR S OF THE COURTS ARE FLOODED WITH PENDING LITIGATIONS. THE PRESENTATION OF THIS APPEAL IS QUITE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WHICH IS BINDING ON THE REVENUE. IN THE ABOVE VIEW OF THE MATTER CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES WE ARE SATISFIED THA T THE BOARD HAS TAKEN A POLICY DECISION NOT TO FILE APPEAL IN A TYPE OF CAS E IN HAND AND THE SAME IS FINDING ON THE REVENUE (APPELLANT HEREIN). IN THE R ESULT WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 6. THE LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED U PON THE CONTRARY DECISIONS GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF RANI PALIWAL (SUPRA) AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE A RORA (SUPRA). HOWEVER WE FIND THAT RECENTLY THE APEX COURT HAS CONSIDERED THE EFFECT O F CIRCULAR ISSUED BY THE CBDT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORP ORATION LTD. 267 ITR 272. THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APE X COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THE FOLLOWING PRINCIP LES AT PAGE 277 OF THE REPORTS :- THE PRINCIPLES LAID DOWN BY ALL THESE DECISIONS ARE (1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COURT O R AN ASSESSEE IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS C ONTRARY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REMAINS IN O PERATION THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. (2) DESPITE THE DECISION OF THIS COURT THE DEPARTM ENT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTIONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXIS TING CIRCULARS OF THE BOARD ARE AB INITIO BAD. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN AR GUMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. (EMPHASIS SUPPLIED) FROM THE ABOVE IT IS EVIDENT THAT THE HONBLE APEX COURT HAS LAID DOWN THAT IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARGUMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULAR. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN F ILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT VIDE CIRCULAR F. NO. 279/MISC-64/05-ITJ DA TED 24TH OCTOBER 2005. THEREFORE ITA.NO.962/AHD/2010 4 THE ABOVE DECISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE. EVEN OTHERWISE THE REVENUE HAS BEEN TAKING A CONSISTENT APPROACH SINCE 1987 NOT TO FILE APPEAL WHERE THE REVENUE EFFECT IS BELOW CERTAIN MO NETARY LIMIT TO REDUCE THE LITIGATION PENDING BEFORE THE TRIBUNAL AND THE COURTS. IF THE APPEALS CONTRARY TO SUCH CIRCULAR ARE ADMITTED IT WOULD FRUSTRATE THE PURPOSE OF ISSUING SUCH INSTRUCTIONS. IN THE ABOVE CIRCUMSTANCES WE RESPECTFULLY FOLLOWING THE DECISI ON OF THE HONBLE APEX COURT IN THE CASE OF INDIAN OIL CORPORATION LTD. (SUPRA) AND BOM BAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. (SUPRA) HOLD THAT THE REVENUE SHOULD NO T HAVE FILED THE APPEAL CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT. ACCORDINGLY THE SAME IS NOT ADMITTED AND BEING DISMISSED IN LIMINE . 7. IN THE RESULT THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 6 TH AUGUST 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 06-08-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD