TMI Blog2006 (7) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... were directed not file the appeal to ITAT where the tax effect is below Rs. 1 lakh. Thereafter in partial modification of the above instruction, the Board vide Instruction No. 2/2005, has further raised the above monetary limit to Rs. 2 lakhs with the same directions. Thus, the CBDT since 1987 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. Thus, we are of the considered opinion that the tax effect in the present year under appeal is less than Rs. 1 lakh following the Instruction No. 1979, the present appeal filed by the Revenue is not maintainable and is required to be dismissed. We do so. In the result, the appeal of the Revenue is dismissed in limine. - Member(s) : G. D. AGARWAL., DINESH K. AGARWAL. ORDER Per N.S. Saini, Accountant Member. - The Hon'ble President, Income-tax Appellate Tribunal vide order dated 8-1-2004 has constituted this Special Bench for deciding the following question:- "Whether on the facts and in the circumstances of the case the assessee engaged in the real estate business and following projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimation issued by the Assistant Registrar, Income-tax Appellate Tribunal, Kolkata Benches to the assessee, it may be seen that the Department filed this appeal before the Tribunal on 6-2-2001 i.e., after the issue of CBDT Instruction on 27-3-2000. Since the tax effect in the appeal was much less than the prescribed monetary limit of Rs. 1 lakh, the Department was not justified in filing the present appeal before the Tribunal in contravention of the CBDT Instruction and, therefore, the appeal was liable to be dismissed on this ground itself. 5. On the other hand, the ld. Departmental Representative for the Revenue argued and submitted that in case of a loss, it cannot be said that the Revenue effect is nil. He placed reliance on the decision of the Hon'ble Calcutta High Court in case of Eastern Aviation Industries Ltd. v. CIT [1994] 208 ITR 1023, wherein it was held "that it is well-settled that the words "income" or "profits and gains" should be understood as including losses also, so that in one sense "profits and gains" represent "positive income" whereas "losses" represents "negative income". In other words, "loss" is "negative profit". Both positive and negative profits are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court and enabling formation of an opinion in that way, the present case should be sent back to the Tribunal for consideration afresh". 7. The third contention of the ld. Departmental Representative for the Revenue was that the Chandigarh Bench of Tribunal in case of ITO v. Dharmvir [2002] 253 ITR 1 held that Central Board of Direct Taxes in Circular dated 27-3-2000 had asked all officers of the Income-tax Department under their control not to file appeals before the Appellate Tribunal in cases where the tax effect involved in appeal did not exceed Rs. 1 lakh. He submitted that the Tribunal observed that these Instructions have been issued to avoid unnecessary litigation in small cases. It is difficult for small assessees from remote and distant place to defend an appeal filed against him in the Appellate Tribunal. Thus the Tribunal held that these Instructions have been issued by the CBDT for mitigation of the hardship of small assessees. He submitted that where substantial revenue was involved and the Department preferred an appeal before the Tribunal, then it was incumbent upon the Tribunal to decide the appeal on merit and not to dismiss the same at the threshold b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit of tax provided in the Instruction. 12. In the rejoinder, the ld. counsel for the assessee submitted that in the present appeal, there was no substantial question of law involved as in the preceding assessment years 1993-94, 1994-95 and 1995-96, the Tribunal upheld the order of the ld. CIT(A) allowing deduction of the administrative expenses claimed by the assessee and also in the subsequent assessment years 1997-98, 1998-99 and 1999-2000, the Tribunal upheld the order of the ld. CIT(A) allowing deduction of the administrative expenses to the assessee and dismissed the appeal of the Revenue. Therefore, it was his submission that it was the consistent method of accounting employed by the assessee that deduction was claimed for the expenses in the year of accrual and was added to the income by the assessee on the completion of the contract. He submitted that it will be seen from the assessment order that the Assessing Officer has disallowed the claim of expenditure of Rs. 69,84,089 but has added the same to the income of the assessee in the assessment year 1997-98, which is evident from the assessment order for the assessment year 1997 -98. By adding the sum of Rs. 69,84,089 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Nos. 972 973/Ko1./2002 for the assessment years 1997-98 and 1998-99. It is also observed that the Department has accepted the above decisions of the Tribunal as the ld. DR could not bring any material before us to show that any appeal was preferred to the Hon'ble High Court against those orders. In the circumstances as the issue is already a decided issue and coupled with the fact that the tax effect on the same is NIL as demonstrated above, in our considered view the issue even if involves a question of law, the same cannot be treated as a substantial question of law. 14. The ld D.R. relied on the decision of the Hon'ble Calcutta High Court in the case of Eastern Aviation Industries Ltd., the decision of the Hon'ble Supreme Court in cases of Harprasad Co. (P.) Ltd., J.H Gotla and P. Doraiswamy Chetty for submitting that income includes negative income, i.e., loss also. But the issue before us is a tax effect involved in the case is above Rs. 1 lakh or not and not the quantum of the income or loss. As demonstrated above, the tax effect in the instant case is NIL and hence the above decisions quoted by the ld. DR. do not support the case of the Revenue. 15. Further, the ld. D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the same are public policy and should be followed. Thus we find that the Hon'ble Delhi and Bombay High Courts have held that the appeals filed by the Revenue in contravention of the CBDT Instructions are not to be admitted. The Amritsar (Special) Bench of the Tribunal in ITO v. Bir Engg. Works [2005] 94 ITD 164 held that instructions of Board prescribing monetary limit for filing appeal before various forums are binding on Income-tax Authorities. We find that recently the Apex Court has considered the effect of Circular issued by the CBDT in the case of Commissioner of Customs v. Indian Oil Corpn. Ltd. [2004] 267 ITR 272. Their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down the following principles 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 or an assessee, it is not open to the Revenue to raise a contention that is contrary to a binding circular by the Board. When a circular remains in operation, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etary limits. Vide Instruction No. 1903, dated 28-10-1992, the monetary limit was revised upward and the officers were directed not file the appeal before the Income-tax Appellate Tribunal where the tax effect was below Rs. 25,000. The above monetary limit was further revised upward by Instruction No. 1979, dated 27-3-2000 and the officers were directed not file the appeal to ITAT where the tax effect is below Rs. 1 lakh. Thereafter in partial modification of the above instruction, the Board vide Instruction No. 2/2005, dated 24-10-2005 has further raised the above monetary limit to Rs. 2 lakhs with the same directions. Thus, the CBDT since 1987 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. and Their Lordships held at page 568 as under:- "It appears that despite the above circular, the Revenue has chosen to file the present appeal knowing fully well that the corridors of the courts are flooded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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