The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal filed by the Revenue as the tax effect was below Rs. 60 lakhs, and in accordance with the Central Board of Direct Taxes (CBDT) circular, appeals in which the tax effect does not exceed Rs. 60 lakhs will be dismissed.
In this case, the revenue has appealed against the order of the Commissioner of Income Tax ( Appeals ) [ CIT ( A ) ] for the assessment year 2016-17 by contending that the CIT ( A ) has erred in deleting the interest charged on outstanding receivables from associated enterprises ( AEs ) and also erred in allowing the appeal of the assessee on disallowance under Section 14A of the Income Tax Act, 1961.
The department argued that the CIT(A) erred in deleting an adjustment of Rs. 1,18,14,779 made to the assessee’s income. According to the department, the adjustment was valid because the provisions of Section 92B of the Income Tax Act have been amended by the Finance Act, 2012, with a retrospective amendment from 01-04-2002.
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The revenue contended that the CIT( A ) wrongly deleted the disallowance under Section 14A of the Income Tax statute as it ignored the fact that the assessee failed to prove that investments resulting in exempt income were made out of their own funds and not from interest-bearing borrowed funds.
The counsel on behalf of the assessee contended that the appeal was unsustainable as a result of the monetary limits set by CBDT Circular No. 09/2024, which directs the dismissal of appeals where the tax effect does not exceed ₹60 lakhs. Thus, by virtue of the above-mentioned circular, all the pending appeals of the revenue in which the tax effect does not exceed 60 lakhs are to be dismissed.
The revenue’s counsel acknowledged the applicability of the above-mentioned circular.
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The ITAT, comprising Pradip Kumar Kedia (Accountant Member ) and Anubhav Sharma ( Judicial Member )noted that in the present case, the tax effect on the disputed issues raised by the Revenue was below Rs. 60 lakhs.
The bench dismissed the appeal filed by the Revenue.
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