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TMI Blog2015 (6) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us is, whether, these appeals of revenue, which are below the prescribed limit of tax effect in view of the Board's Instruction No.5/2014 issued on 10-72014 revising the monetary limits for filing of appeals by the Department before ITAT are maintainable or not. 5. We have considered the judgment of Hon'ble Delhi High Court in the case of CIT v. P.S. Jain & Co. (2011) 335 ITR 591 has held as under: "This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of the Departments have been increased consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken a decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the Department. In our view, the Board's circular dated 27-32000 is very much applicable even to the old references which are still undecided. The Department is not justified in proceeding with the old refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The argument of the learned Counsel for the revenue in that case was, that the instruction issued on 15-5-2008 did not preclude the department from continuing with the appeals and/or Petitions filed prior to 15-5-2008, if they involved a substantial question of law of a recurring nature, notwithstanding the fact that the total cumulative tax effect involved in the appeals was less than Rs. 4 Lacs. It was submitted, such appeals which were filed prior to the issuance of Instruction and where substantial questions of law were raised, were required to be decided on merits. The Court, while considering the issue observed that paragraph 5 of the Circular made it clear that no appeals would be filed in the cases involving tax effect less than Rs. 4 Lacs notwithstanding the issue being of recurring nature. Relying on the judgement in CIT v. Polycott Corporation, the Court observed as follows: "6 The aforesaid judicial verdict makes it clear that the circular dt. 155-2008 in general and para (5) thereof in particular lay down that even if the same issue, in respect of same assessee, for other assessment years is involved, even then the Department should not file appeal, if the tax ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax v. Delhi Race Club Ltd.", decided on 3-3-2011, by relying on its earlier Judgement "Commissioner Income Tax Delhi-III v. M/s P.S. Jain and Co. decided on 2-8-2010 has held that the CBDT circular raising the monetary limit of the tax effect to Rs. 10 Lacs would be applicable to pending cases also. 17. It is true that this judgement in Chhajer's case (supra) was not brought to the notice of the Division Bench, while deciding either Madhukar'scase (supra) or the case of Polycot Corporation (supra). However, the instruction of 2005 which was considered in Chhajer's case has also been interpreted in Polycot Corporation (supra). The consistent view of the Court has been that the CBDT instruction would apply to pending cases as well. The main objective of such instructions is to reduce the pending litigation where the tax effect is considerably small. Therefore, in our opinion, the tax appeals are required to be dismissed, as they are not maintainable in view of the provisions of section 268A of the Income Tax, and theCBDT Instruction No. 3 of 2011." 7. The same view has been taken by the Karnataka High Court in ITA No. 3191 of 2005 in The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The assessing officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves/counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was o tiled or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the judicial folders in the office of CIT must be maintained in a systemic manner for easy retrieval. 8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect. (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department. 9. The proposal for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p concerns are not meant for earning dividend income, therefore, the same are required to excluded from total investment while computing disallowance u/s.14A. Reliance was also placed on the following decisions :- i) M/s Smart Chip Ltd. (ITA Nos.1923, 5196,5367/Mum/2012, order dated 28-11-2014); ii) Garware Wall Ropes Ltd., ITA Nos.5408,4957/Mum/2012, 65 SOT 86); iii) M/s JM Financial Limited (ITA No.4521/Mum/2012, order dated 26-3-2014); 11. We have gone through the orders of the authorities below and found that as per the audited balancesheet, the assessee has made substantial investment in group concern as a strategic investment. As per the decision of coordinate bench, strategic investment are required to be excluded from total investment while working out disallowance under Rule 8D. The precise observation of the Tribunal in case of M/s Smart Chip Ltd. (supra) was as under :- "6. We have considered the rival contentions, carefully perused the record, gone through the orders of authorities below and the judicial pronouncement referred by the lower authorities as well as ld. Representatives of both the parties during the course of hearing before us. From the record w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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