The Mumbai ITAT, in a recent ruling, held that ‘tax effect’ for the purpose of filing second appeal before the Income Tax Appellate Tribunal would not include interest.
In the instant case, the department filed a second appeal before the ITAT against the order of the first appellate authority who concluded the matter in favour of the assessee, Shri Ubaid Patel.
A two member bench of the ITAT found that the tax effect on the income under dispute is less than Rs.10 lakhs.
The bench noted that the Central Board of Direct Taxes vide Circular No. 21/2015 dated 10th December, 2015 file no.279 of Misc. 142/2007 – ITJ (PT) has issued the direction in supersession of the Instruction No.5/2014 dated 10/07/2014 in pursuance with the power entrusted u/s. 268A of the Income Tax Act, that no appeal should be filed before this Tribunal in case tax effect does not exceed Rs.10 lakhs.
Dismissing the appeal, the bench said that “the “tax effect” in this regard means the difference between the tax on the total income assessed and the tax that what have been chargeable had such total income been reduced by the amount of income in respect of issues against which appeal is intended to be filed. This circular further states that tax will not include any interest thereon the chargeability of interest itself is in dispute”.
Read the full text of the Order below.
