Tax Effect Less than Threshold Limit Fixed by CBDT: Calcutta HC Dismisses Appeal by Income Tax Department [Read Order]

The Calcutta High Court dismissed an appeal by the Income Tax Department as the tax effect was less than the threshold limit fixed by the Central Board of Direct Taxes (CBDT).

The present case is an appeal by the revenue filed under Section 260A of the Income Tax Act, 1961, directed against the order passed by the Income Tax Appellate Tribunal (ITAT), “C” Bench, Kolkata.

The Senior Counsel for the respondent/assessee submitted that the tax effect in the instant case is less than Rs.1 Crore, that is, Rs.65,05,587/- and therefore the revenue cannot pursue this appeal on the ground of low tax effect. In order to afford an opportunity to the revenue to come back on the said question, the matter stood adjourned by the order. It appeared that no specific written instructions have been given to the Standing Counsel for the appellant in this regard. Nevertheless, the Court examined the matter.

It was seen that the deduction under Section 80IC of the Income Tax Act at 30% of the profit is Rs.2,13,11,566/- as against the claim of the assessee of Rs.4,10,25,466/-. If this is taken, the tax effect will be less than the threshold limit of Rs.1 Crore. However, on perusal of the order passed by the Commissioner of Income Tax (Appeals) 22, Kol [CIT(A)], the tax amount is mentioned as Rs.1,03,10,590/-.

A Division Bench of Chief Justice TS Sivagnanam and Justice Ajay Kumar Gupta observed that “In our view, the said computation is on account of mistake computed while not rightly noting on what amount the tax has to be computed.”

“As could be seen from the above table, the total tax is Rs.80,05,462/-. Thus, it is clear that the tax effect in the instant case is less than the threshold limit fixed by the CBDT. Hence the revenue cannot pursue this appeal. Accordingly, the appeal stands disposed of on the ground of low tax effect and the substantial questions of law are left open” the Court concluded.

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