CIT vs. Sevak Pharma Pvt. Ltd (Bombay High Court)

DATE: (Date of pronouncement)
DATE: April 3, 2013 (Date of publication)

Click here to download the judgement (sewak_low_tax_effect_circular.pdf)

Low Tax Effect Circular: Dept to show why appeal should not be dismissed

The department filed an appeal before the Tribunal. The Tribunal dismissed the appeal on the ground that the tax involved in the appeal was less than the monetary limit of Rs. 3 lakhs prescribed in CBDT Instruction No.3/2011 dated 9.2.2011. The Tribunal followed Madhukar Inamdar (HUF) 318 ITR 149 (Bom) where it was held that the CBDT Instructions fixing monetary limit for filing an appeal to the Tribunal would apply even to pending cases. The Department then filed a MA before the Tribunal pointing out that in CIT v. Surya Herbal the Supreme Court had held that the CBDT Instruction No.3/2011 would not apply ipso facto and would not apply where the matter has cascading effect or raises a common principle involving a large number of matters. The Tribunal dismissed the MA. On appeal by the department to the High Court, HELD dismissing the appeal:

The grievance of the Revenue is that the Tribunal ought to have entertained the appeal by following the decision of the Apex Court in the matter of Surya Herbal Ltd. However, the revenue has not been able to point out before us any of circumstance as laid down by the Supreme Court in the matter of Surya Herbal Ltd being applicable to this case which would lead to non application of CBDT instructions No.3/2011. In the above circumstances, we see no reason to entertain the proposed question of law (it was also held following Chem Amit 272 ITR 397 that an appeal u/s 260A cannot be filed to challenge an order dismissing a MA)

See also Varsha Dilip Kohle where the same view was taken. There is a raging controversy over whether the CBDT Instruction applies to pending appeals or not. In Virgo Marketing (SC) the matter was left open. In Sumangaladevi, the K’taka HC has dissented from its own view in Ranka & Ranka. In Shambhubhai (Guj), the matter has been referred to a Full Bench. See also CBDT’s letter dated 02.09.2011

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