A two-judge bench of the Supreme Court of India has recently ruled that the Central Board of Direct Taxes (CBDT), the apex policy-making body of the direct tax in India, cannot issue any circular having retrospective operation.
The bench comprising Justice R K Agarwal and Justice Abhay Manohar Sapre held that the instruction/circular issued on 9.2.2011 directing withdrawal of low tax effect appeals applies only to appeals filed after that date and not to pending appeals.
The Board, in the year 2015, has issued the above circular for regularising the monetary limits for filing the appeal by the Revenue before the Tribunal, High Courts and Apex Court with an object for reducing litigation.
Paragraph 10 of the Circular reads as, “This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.”
Before the High Court, the respondent-assessees argued that the circular cannot have retrospective operation.
Allowing the contentions of the assessee, the bench said that the CBDT itself vide Circular dated 10.12.2015 directed that the instruction to withdraw low tax effect appeals will apply retrospectively to pending appeals has no bearing.
Subscribe Taxscan Premium to view the Judgment
