APPEAL FEES IN CASE OF LOSS

[C.A. DEV KUMAR KOTHARI]

Cases of loss:

In case of loss there is no Gross Total income, and deductions under chapter VI A are also not allowed. The factual and legal position is that the loss is kept apart for set off, if possible, and if set off is not possible then the loss is carried forward. The loss does not form part of income of current year. Therefore it cannot be a part of total income. It would be wrong to say that the loss is a negative income. The loss is loss and is qualitatively opposite to income.

The expression 'total income' means positive income:

As per section 4 which is the charging section, tax is levied on 'total income'.  A tax on loss is not permissible. The concept that loss is negative income,  is conceptually against the concept of imposing  tax on income. Because if loss is considered as negative income, then the computer may generate report to negative tax payable that means refund tax on amount of loss according to applicable rates. The use of expression 'total income' in charging sections like section 4, 115J, 115JA, 115JB can only mean positive income, which is derived at by deduction from positive gross total income , any deduction permissible under chapter VIA. This is also applicable in relation to provision for fees payable by assessee while filing appeal before CIT(A) and ITAT.

Provisions relating to appeal fees:

Appeal before CIT(A):

Section 249. Form of appeal and limitation.

Every appeal under this Chapter shall be in the prescribed form and shall be verified in the prescribed manner [and shall, in case of an appeal made to the Commissioner (Appeals) on or after the lst day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto be accompanied by a fee of, -

where the total income of the assessee as computed by the Assessing Officer in the case to which the appeal relates is one hundred thousand rupees or less, two hundred fifty rupees;

where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, five hundred rupees;

where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one thousand rupees;]

where the subject-matter of an appeal is not covered under clauses (i), (ii) and (iii), two hundred fifty rupees.]

Appeal before ITAT:

Section 253(6)

An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after the lst day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of, -

where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates, is one hundred thousand rupees or less, five hundred rupees;

where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees;

where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent of the assessed income, subject to a maximum of ten thousand rupees;

where the subject-matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees:]

Provided that no such fee shall be payable in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section (4).

An analysis:

We find that the prescribed appeal fees is based on the amount of 'total income', where there is total income computed. However, where there is no 'total income', the case will fall into residuary clause. This is because it cannot be said that there is total income of X amount. The total income is nil, and the loss (whatever be the amount) is set apart for carry forward, if permissible.

Therefore clauses (i) to (iii) of S. 249 (1) and clauses a-d of S. 253 (6) will not apply.  In case of appeal before CIT(A) clause (iv) of S. 249 (1)  and in case of appeal before ITAT clause (d) of section 253 (6) will apply. Accordingly appeal fees payable should be considered as Rs. 250 and Rs.500/- .

Appeal fees when MAT is applied:

In case of application of S. 115J, 115JA and 115JB, in case of companies, when there is loss in normally computed income, the fees payable should be Rs.250 and  500 before CIT(A) and ITAT respectively. This is because S. 249 and 253 and provisions of fees are old provisions and they were in the Act,even when there was no MAT. The provisions of S. 249 and 253 are concerned with total income as per normal computation and not with reference to deemed income under S. 115J, 115JA and 115JB. Therefore, in case of loss where there is imposition of tax by way of MAT, the fees should be computed with reference to income computed as per normal computation provisions. In case there is loss in normal computation, the fees payable will be as per S. 249(1) (iv) and 253 (6) (d) as discussed earlier.  

Other related articles on the website:

The reads may refer to the following articles and send their feedback.

'INCOME' DOES NOT INCLUDE `LOSS' FOR ALL PURPOSES  Hosted on 23-05-2008

No justification for appeal fees payable by taxpayer as appeal is usually to get redressal of wrongs done by revenue officers Hosted on - 05-12-2008.