Limits for filing appeals by dept ????

[CA.BHUPENDRASHAH]

The department is mulling over an increase in limits above which it files
appeals in the tribunal or courts, an official familiar with the development
told The Indian Express.

The department is planning to change the limits for appeals. Now, for filing an
appeal in Income Tax Appellate Tribunal (ITAT), the tax effect should be Rs 3
lakh, for high courts it has been increased to Rs 10 lakh and for Supreme Court
it is Rs 25 lakh, the official said.
As of now, if the tax effect is Rs 2 lakh, the department can file an appeal in
Income Tax Appellate Tribunal. If the tax effect is Rs 4 lakh, the appeal can be
filed in high court and if the tax effect is Rs 10 lakh, appeal can be filed in
the Supreme Court.

With the move, the income tax department expects to reduce up to 13 per cent
cases at ITAT level and 25-30 per cent cases at high court and Supreme Court
level each, the source added.

Even if the case is strong enough to be taken to the tribunal, the department
will not do so. This will cut down the wastage of resources in unnecessary
litigation and reduce the burden of overburdened courts while at the same time
assess would also benefit from this policy, the official added.

According to the National Litigation Policy, the government should work towards
reducing litigation in courts so that valuable court time would be spent in
resolving other pending cases. This will help in achieving the goal in the
National Legal Mission to reduce average pendency time from 15 years to 3 years.

The policy envisages that government and its various agencies, which are the
pre-dominant litigants in courts and tribunals in the country, should become
efficient and responsible litigant.

The initiative by the income tax department comes in the backdrop of criticism
by finance minister Pranab Mukherjee that the I-T department has emerged as the
largest litigant in the country.

Last year, the Comptroller and Auditor General of India (CAG) had stated in its
report that the disputed tax amount can wipe off the revenue deficit of the
government in 2008-09.
The total amount of direct tax stuck at the commissioner (appeals) level is Rs
2.2 lakh crore for 2008-09, the CAG had pointed out.

Apart from that, Rs 12,757.59 crore is stuck at Income Tax Appellate Tribunal,
Supreme Court and high court levels, the finance minister had told the
Parliament last year.

[pawansingla]

2011-TIOL-58-HC-KAR-IT

IN THE HIGH COURT OF KARNATAKA
AT BANGALORE

ITA No.771 of 2006

1) COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, C R BUILDING, QUEENS
ROAD, BANGALORE
2) DEPUTY COMMISSIONER OF INCOME TAX
SPECIAL RANGE-4, C R BUILDING, QUEENS ROAD
BANGALORE

Vs

M/s I G PETROCHEMICALS LTD
D-4, JYOTHI COMPLEX, INFANTRY ROAD
BANGALORE

N Kumar and Ravi Malimath, JJ

Dated: January 4, 2011

Appellant Rep by: Shri M V Seshachala, Adv.
Respondent Rep by: Shri Parthasarathi, Adv.

Income Tax - Section 10B - Whether while claiming Sec 10B benefits, assessee is entitled to carry forward depreciation.

Assessee set up a 100% export oriented unit. It claimed exemption u/s 10B for the A.Y 1996-97. While computing the assessment, the AO was of the view that the unabsorbed depreciation of the earlier years, acquired the character of the current years depreciation and the same was to be set off against the current year's business income in arriving at the profits of the unit - thus, AO denied the claim of the assessee to carry forward depreciation. The CIT(A) dismissed assessee's Appeal. The Tribunal following the judgment rendered by ITAT, Bangalore Bench in the case of Himatsingika Seida Ltd., Vs. ACIT held that the AO was not justified in denying the claim of the assessee to carry forward depreciation and thus allowed the appeal of the assessee.

On appeal, the HC held that,

++ in the case of Himatsingika Seida Ltd it was held that the order of the Tribunal was erroneous and prejudicial to the interests of the Revenue and accordingly, it had set aside the judgment of the Tribunal. Following that judgment, the order passed by the Tribunal also requires to be set aside as the said judgment of the Tribunal is based on the order passed in the earlier said case;

++ issue remanded to the AO with a direction to await the judgment of the Apex Court in the aforesaid case and in the event the Apex Court upholds the order passed by this Court, only then to proceed to recover the amount due in terms of the assessment order. However, if the Apex Court were to set aside the order passed by this Court, then the order of the Tribunal which the Court has set aside today, stands restored and the assessee is entitled to the benefit of the same.

Case remanded
JUDGEMENT

This appeal is by the revenue challenging the order passed by the Tribunal, which allowed the claim of the assessee to carry forward depreciation.

2. The Assessee Company has set up a 100% export oriented unit. The assessee exercised its option to claim exemption under Section 10B of the Income Tax Act for the assessment year 1996-97. While computing the assessment, the Assessing Officer was of the view that the unabsorbed depreciation of the earlier years, would acquire the character of the current years depreciation and the same has to be set off against the current year's business income in arriving at the profits of the export oriented unit, income of which is claimed to be exempted under Section 10B(1) of the Act. Therefore, the Assessing Officer denied the claim of the assessee to carry forward depreciation. The assessee preferred an appeal, which came to be dismissed. It is against the said order, the assessee preferred an appeal to the Tribunal. The Tribunal following the judgment rendered by ITAT, Bangalore Bench in the case of Himatsingika Seida Ltd., Vs. ACIT (63 ITD 290) held that the Assessing Officer was not justified in denying the claim of the assessee to carry forward depreciation and thus allowed the appeal of the assessee and granted the deduction. Aggrieved by the same, the revenue is in appeal.

3. The judgment of the ITAT, Bangalore Bench in the case of Himatsingika Seida Ltd., Vs. ACIT was challenged by the revenue before this Court. This Court by its order dated 4th August 2006 passed in ITRC No.350/1998 held that the Tribunal was not right in law in holding that the assessment order passed by the Assessing Officer allowing the claim of the assessee for adjustment of the unabsorbed depreciation against the other business income once again to show nil tax liability and it held that the said order is erroneous and prejudicial to the interests of the Revenue and accordingly, it set aside the judgment of the Tribunal.

4. In view of the aforesaid admitted position, following the judgment of this Court in the aforesaid case, the order passed by the Tribunal also requires to be set aside as the said judgment of the Tribunal is based on the order passed in the earlier said case, accordingly, it is hereby set aside.

5. However, it is pointed out that the said order of the High Court is under challenge before the Apex court in Appeal Civil No. 1501/2008 and this Court has to await that decision in the said case. We are not inclined to accept the contention. However, it will not be proper for us to make the assessee to also approach the Apex Court against our order. In those circumstances, we deem it proper to set aside the order of the Tribunal and remand the matter back to the Assessment Officer with a direction to him to await the judgment of the Apex Court in the aforesaid case and in the event the Apex Court upholds the order passed by this Court, only then to proceed to recovery the amount due in terms of the assessment order. However, if the Apex Court were to set aside the order passed by this Court, then the order of the Tribunal which we have set aside today, stands restored and the assessee is entitled to the benefit of the same. In our considered view this would meet the ends of justice. Hence, we pass the following order:

i) The appeal is allowed.

ii) The impugned order dated 25.11.2005 passed by Appellate Commissioner confirming the order passed by the Deputy Commissioner of Income Tax, (Asst), Special Range-4, Bangalore in ITA.No.118/BANG/2003 is set aside subject to the conditions stipulated above.