Income Tax Appellate Tribunal - Ahmedabad
Inara Housing Finance Ltd.,, Surat vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "B", AHMEDABAD
Before Shri Bhavnesh Saini,JM & Shri A.N. Pahuja, AM
I.T.A. No.618& 1785/Ahd/2007
(Assessment years 2002-03 & 2003-04)
Inara Housing Finance Ltd vs ITO, Ward-1(2)
301, Hassanand Complex Surat
Godha Street, Nanpura
Surat
[PAN : AAACI7694B]
(Appellant) (Respondent)
I.T.A. No.2014/Ahd/2007
(Assessment year 2003-04)
ITO Ward-1(2) vs Inara Housing Finance Ltd
Surat Surat
(Appellant) (Respondent)
Assessee by : Shri RK Malpani, AR
Revenue by : Smt. Neeta Shah, DR
ORDER
A.N. Pahuja : These three appeals are directed against two separate orders dated d 20-12-2006 and 7-03-2007 of the CIT(A)-I, Surat. The two appeals by the assessee for the AYs 2002-03 & 2003-04 raise common grounds of appeals while the appeal of the Revenue for the AY 2003-04 relates to addition u/s 68 of the Income-tax Act,1961[hereinafter referred to as the 'Act'] .Since these appeals pertained to the same assessee while issues are common, these were heard together for the sake of convenience and are being disposed of through this common order.
I.T.A. No.618& 1785/Ahd/2007
2. Adverting first to ground no.1 in the two appeals of the assessee , facts in brief, as per relevant orders are that return declaring income of Rs.4,65,460/- for the AY 2002-03 & Rs.5,30,620/- for the 2003-04 filed by the assessee on 9.10.2002 & 10.11.2003 respectively were processed on 29.1.2003 & 3.12.2003. Thereafter , the AO reopened the assessments for these two assessment years 2 I.T.A. No.618, 1785& 2014/Ahd/2007 after recording reasons with the issue of notice dated u/s 148 of the Act. In their written submissions the assessee submitted that the reasons recorded for reopening these assessments were not provided to the assessee and the assessee relied on the judgment of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd vs ITO (2003) 259 ITR 19 (SC). Similar contention was raised before the ld. CIT(A), who observed in paragraph 2.4 & 2.3 of his order for these two assessment years that "It is seen from the assessment records that reasons recorded for reopening have been shown to the authorized representative Mr. Aadil Aibda,C.A.. His signatures are there on the copy of reasons recorded". In these circumstances, especially when return was merely processed u./s 143(1) of the Act, the ld. CIT(A) rejected the grounds of the assessee in these two assessment years. The ld. AR appearing before us did not argue on this aspect any further.
3. We have heard the rival contentions and gone through the facts of the case. Admittedly, in this case after processing of returns u/s 143(1)(a) of the Act on 29.1.2003 for the AY 2002-03 & on 3.12.2003 for the AY 2003-04,the AO reopened the assessment after recording the following reasons.
AY 2002-03 " The assessee has filed the return of income declaring total income of Rs.4,65,460/- for the AY 2002-03 on 9.10.2002 . The assessee company is engaged in business of long term financing for housing purpose. On perusal of the P&L account attached with return of income, it is noticed that the assessee has debited the amount for provision of N.P.A. of Rs.2,33,825/- which is not for outstanding / payable expenses.
2. It is further observed from P&L A/c that the assessee had reflected income of Rs.7,49,617/- from 'Other Sources', in addition to operating income. The assessee has claimed deduction u/s 36(1)(viii)of the I.T. Act i.e. 40% of the Profitability derived from House Finance business. The assessee has claimed deduction of Rs.3,39,490/- on inclusive above mention income i.e. income from other sources. The assessee company is not entitled to deduction on above income, under the circumstance, excessive deduction has been claimed u/s 36(1)(viii).
3. Considering the facts, I have the reason to believe that the income of Rs.2,33,825/- and amount of excess claimed deduction chargeable to 3 I.T.A. No.618, 1785& 2014/Ahd/2007 tax has escaped assessment for A.Y. 2002-03 therefore notice U/s.148 of the I.T. Act is issued in this case."
A.Y. 2003-04 "The assessee has filed the return of income declaring total income of Rs.5,30,620/- on 10.11.03. The return of income was processed U/s 143(1) of the Act on 3.12.03, on the returned income. The assessee company is engaged in business of long term financing for housing purpose. On perusal of the P&L account attached with return of income, it is noticed that the assessee has debited the amount for provision for NPA.. of Rs.2,93,218/- which is merely a provision and not an ascertained liability.
2. It is further observed from P&L A/C that the assessee had reflected income of Rs.4,65,637/- from 'Other Sources', in addition to operating income. The assessee has claimed deduction U/s 36(1)(viii) of the I.T. Act i.e. 40% of the Profitablity derived from Housing Finance business. The assessee has claimed deduction of Rs.3,48,142/- on inclusive above mentioned income i.e. income from other sources. The assessee company is not entitled to deduction on above income, under the circumstances, excessive deduction has been claimed U/s 36(1)(viii) of the Act.
3. Considering the above facts, I have the reason to believe that the income of Rs.2,93,218/- and amount of excess claimed deduction chargeable to tax has escaped assessment for A.Y. 2003-04."
Issue notice u/s 148 of the IT Act,1961 for AY 2003-04."
4. As is apparent from the aforesaid reasons, the AO reopened these assessments on the ground that provision for NPA was not admissible while the deduction u/s 36(1)(viii) of the Act was not allowable on income from other sources and thus, the assessee claimed excessive deduction. We find that Hon'ble Supreme Court in their decision dated 11.1.2010 the case of M/s Southern Technologies Ltd. versus Joint Commnr. of Income Tax, Coimbatore in civil appeal no.1337 of 2003 held that provision for NPA is not deductible. Thus this issue is now settled. As regard non-supply of reasons by the AO pleaded in the written submission, we find from copy of the reasons placed in paper books that reasons were available with the assessee and in any case, in the light of findings of the ld. CIT(A), no further submissions were made before us on this 4 I.T.A. No.618, 1785& 2014/Ahd/2007 aspect by the ld. AR on behalf of the assessee .In these circumstances, we do not find any infirmity in reopening the assessment on that ground so long as ingredients of provision of section 147/148 are fulfilled. Hon'ble Punjab and Haryana High Court in the case of Metal products of India Vs. CIT, 293 ITR 618 held that once the returns were processed under section 143(1) of the Act, proceedings under section 148 of the Act could be initiated. If the ingredients of section 148 of the Act are satisfied, there is no bar to initiation of proceedings under section 148 of the Act. In this connection, Hon'ble Supreme Court held in the case of ACIT Vs. Rajesh Jhaveri stock Brokers Pvt. Ltd.,291 ITR 500(SC) held "The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso.
So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued."
5 I.T.A. No.618, 1785& 2014/Ahd/20074.1 Even the jurisdictional High Court in the case of Bharat V Patel vs. Union of india,268 ITR 116, following the decision in the case of Praful Chunilal Patel,236 ITR 832(Guj) held:
"Thus, in the liberalised and simplified tax collection regime, mere acceptance and acknowledgment of return and issuance of refund cannot be elevated to the status of regular assessment and formation of opinion about the incidence of tax on a particular claim or item mentioned in the return of income. And in the absence of any formation of opinion about the taxability of the non-compete fees, in the facts of the present case, there can be no question of change of opinion.
On the other hand, the deeming fiction provided by Explanation 2 to section 147 of the Act imparts an added obligation in the matter of believing escapement of income. According to the aforesaid Explanation (clause (c)) even where an assessment is made, but income chargeable to tax has been under-assessed, it has to be deemed that such income has escaped assessment, and after noticing that income chargeable to tax was under assessed and applying the deeming fiction and the ratio of the aforesaid judgment in Praful Chunilal Patel [1999] 236 ITR 832 (Guj), the Assessing Officer can hardly have reason not to believe that any income chargeable to tax has escaped assessment."
4.2 In the light of aforesaid decisions of Hon'ble Supreme Court and jurisdictional High Court, since the AO has reopened these assessments after duly recording the reasons and the ld. authorised representative could not point out any infirmity either in the reasons or in the findings of ld.CIT(A), we have no hesitation in upholding the reopening of the assessments for these two assessment years. It is settled law that once proceedings u/s 147 are taken to be validly initiated, the jurisdiction of the AO can not be confined only to that portion of income which is mentioned in the reasons but to entire income that had escaped assessment during the year. Therefore, ground no.1 in both these appeals is dismissed.
5. Ground no.2 in both these appeals of the assessee relates to upholding of disallowance of NPA provisions as per prudential norms. During the course of assessment proceedings for the AY 2002-03, the AO noticed that the assessee claimed deduction for an amount of Rs. 2,33,825/- on account of provision for NPA.Likewise an amount of Rs. 2,93,218/- was claimed in the AY 2003-04. To a 6 I.T.A. No.618, 1785& 2014/Ahd/2007 query by the AO, the assessee replied that the said amount was claimed as deduction u/s 36(1)(viia) of the Act, the provision being mandatory in terms of the directions of National Housing Bank (NHB), Delhi. As per NHB Guidelines, all housing finance companies have to provide for bad and doubtful debts i.e. where installments are delayed beyond 6 months on continuous basis, the assessee pointed out. However, the AO did not accept these submissions of the assessee on the ground that the assessee was neither a scheduled bank nor a non scheduled bank or a public financial institution in terms of provisions of sec. 36(1)(viia) of the Act .Since the assessee, inter alia, did not reply to a showcause notice issued by the AO, claim for deduction was disallowed .
6. On appeal, the assessee contended that the amount in question is allowable u/s 37 of the Act, if not allowable u/s 36(1)(viia) of the Act as this expenditure / loss had been incurred wholly during the course of business by the assessee. Since the assessee is carrying on the same business as any other bank , the provisions of section 36(1)(viia) are applicable, the assessee company being a non-scheduled bank. Inter alia,the assessee relied on a judgment of the Delhi High Court in the case of CIT vs Eicher Ltd 205 CTR 469 (Del) wherein it is held that the provision for NPA is an ascertained business loss / expenditure. However, it was conceded before the ld. CIT(A) that the decision was rendered in the context of provisions of section 115J / 115JA of the Act. In the light of these submissions, the ld CIT(A) upheld the findings of the AO in the following terms in the AY 2002-03:
"3.3 I have considered the submissions made by the appellant and observations of the AO. It is very clear that the assessee does not fall within the provisions of section 36(1)(viia) which applies to the scheduled bank or a non-scheduled bank. As claimed by the assessee it is not covered by the definition of non-scheduled bank as defined in clause (i) of Explanation below clause (viia) of Section 36(1). Hence, the claim is not allowable under these provisions. The amount is also not allowable u/s 37(1) because the provision for NPA is not an ascertained liability at all for the purpose of section 37(1). The decision of Hon'ble Delhi High Court in the case 7 I.T.A. No.618, 1785& 2014/Ahd/2007 of CIT v. Eicher Ltd (supra) was in the context of book profit u/s 115J / 115JA and therefore, it cannot be said that the NPA can be treated as ascertained liability within the meaning of section 37(1). If the NPA could be considered as allowable liability u/s 37(1) then there would have been no need for the provisions of section
361)(viia) in the Income Tax Act even for the normal banks.
Therefore, the disallowance made by the AO is confirmed and this ground of appeal is dismissed."
6.1 Likewise in the appeal for the AY 2003-04, the ld. CIT(A) upheld the disallowance.
7. Aggrieved, the assessee is now in appeal before us. At the outset, both the parties agreed that issue has been settled by the Hon'ble Supreme Court in their decision dated 11.1.2010 the case of M/s Southern Technologies Ltd.versus Joint Commnr. of Income Tax, Coimbatore in civil appeal no.1337 of 2003.,
8. We have heard both the parties and gone through the facts of the case Undisputedly, the assessee company is not covered by the definition of non- scheduled bank as defined in clause (i) or a public financial institution as defined in clause(iii) of the explanation below clause (viia) of Section 36(1) of the Act. Therefore, the claim for deduction u/s 36(1)(viia) of the Act is apparently, not tenable. In the aforesaid decision in M/s Southern Technologies Ltd.(supra) ,Hon'ble Supreme Court held that though the RBI Directions deviate from the accounting practice as provided in the Companies Act, they do not override the provisions of the IT Act. The RBI Directions 1998 and the IT Act operate in different fields. It was further held that the "Provision for NPA" made in terms of the RBI Directions does not constitute expense for purposes of s. 36(1)(vii). The said Provision is for presentation purposes and in that sense it is notional. A provision for NPA is only a notional expense. Further, under the Expl to s. 36(1)(vii) a provision for doubtful debt is not allowable. For the same reason, deduction can also not be claimed u/s 37 (1)of the Act since section 37 applies only to items which do not fall in Sections 30 to 36 of the Act. In the light of this view taken by the Hon'ble Apex Court, we have no alternative but to uphold the 8 I.T.A. No.618, 1785& 2014/Ahd/2007 findings of the ld. CIT(A). Therefore, ground no.2 in both these appeals of the assessee is dismissed.
9. Next ground no.3 in these two appeals the assessee relates to confirmation of disallowance of claim u/s 36(1)(viii) of the Act. During the course of assessment proceedings, the AO asked the assessee to furnish details and documentary evidence of each of the property purchased / constructed from the advances given by it, along with applications made by the borrowers, seeking advance for this purpose. However, the assessee did not furnish the required details properly. In response to a notice u/s 133(6) of the Act, the following parties confirmed that they did not purchase any residential property with the loan received from the assessee:
M/s Laxmi Hari Prints (P) Ltd Rs. 1,20,000/-
M/s Ankit Sizers (P) Ltd Rs. 2,80,000/-
M/s Hitech Weaves (P) Ltd Rs. 2,80,000/-
Accordingly, the AO was of the view that the loans were not used for
purchasing and construction of any residential house and therefore, the assessee is not eligible for making claim, as it did not fulfill the conditions stipulated u/s 36(1)(viii) of the Act viz. that the loans / finance should be utilized for purchase / construction of residential houses. When confronted, the assessee replied as follows:
" Our Company has been established as a Housing Finance company. Main object of the Company is giving long term housing finance. In our country, Housing finance Companies are required to be registered with National Housing Bank, Delhi. Ur Company is registered accordingly. We enclose herewith copy of Registration Certificate with National Housing Bank. The sole evidence prove beyond doubt, the fact that, we are a Housing Finance Company.
We have received Loan Application Form from all the borrowers. It is clearly evident from such Application Forms that, all the loans disbursed by us are only long term housing loans. The 9 I.T.A. No.618, 1785& 2014/Ahd/2007 loans granted in earlier years are also housing loans only. In few cases, because of lack of clear legal titles of the housing property, the other asset were taken in security. This was a business prudence to secure our advances fully and perfectly. But the purpose of loan is Housing Finance only.
In some cases, the end-use could not be monitored does not mean that, the main object of our company is not Housing Finance. The purpose declared in all these loans were for housing only.
In view of the above, we clearly fall in the category of section 36(1)(viii) i.e. Public Company established with main object of Housing Finance. Hence, we are clearly eligible for deduction u/s 36(1)(viii) of the Act."
9.1 However, the AO did not accept the aforesaid explanation of the assessee on the ground that the onus is on the assessee to prove that the loans granted by it for housing purposes were in fact used for housing purpose. Since the assessee did not produce any evidence or document which could establish that the loan given by it, had been used for purchasing or construction of a residential house while the aforesaid three parties admitted that the loans taken by them were not for housing purposes but were general loans ,the AO disallowed claim for deduction of Rs.3,39,490/- in the AY 2002-03 & Rs.3,48,142/- in the AY 2003-04 u/s 36(1)(viii) of the Act.
10. On appeal, the assessee while reiterating their contentions before the AO submitted that the assessee a housing company registered with NHB and was formed with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential purposes. On the back side of the applications of the borrowers produced before the AO, complete details of the house property for which loans had been granted were mentioned. The total numbers of borrowers at the end of the year under appeal were 194 and merely on the basis of reply of three parties, the AO cannot conclude that the loans were not given for housing purposes. Since the assessee company was providing housing finance to the backward class and poor people, who did not maintain accounts, it cannot be said that the funds were not used for 10 I.T.A. No.618, 1785& 2014/Ahd/2007 purchasing / construction of houses. It was further argued that since the company is formed and registered with NHB for the purpose of carrying business of providing long term finance for construction / purchases of houses for residential purposes, the assessee was eligible for deduction u/s 36(1)(viii) of the Act. However, the ld. CIT(A) did not accept the plea of the assessee ,holding as under:
"4.5 I have considered the submissions made by the appellant and observations of the A.O. It is not denied that the appellant company is formed and registered for the purpose of providing long term finance for construction and purchase of houses for residential purpose. However, from the simple perusal of application forms and the modus of disbursement of finance to the borrowers, it is seen that he appellant company has not bothered to go beyond the form and see if the money being disbursed was being used for the purpose of construction or purchase of residential houses or not. The appellant company has simply filed the application where it is mentioned that the loan is required for purchasing or construction a particular residential house and it has simply issued the cheque to the borrower in the name of the borrower only. The appellant company has not created or established any systems to check or verify whether the finance provided by it or used for the purpose for which it was given or it was used for some other purpose. The appellant company was happy as long as it continued to receive the installments against the loans given. It is elementary that any housing finance company or any bank which is providing finance for construction or purchase of residential houses ensures that the following requirements are completed either by the borrower or by its own staff:-
• The application is obtained from the borrower mentioning the property proposed to be purchased or constructed with the details of not only property but the seller or the builder. • The borrower is asked to submit allotment letter or an agreement copy in respect of the property proposed to be purchased/constructed.
• The borrower is required to submit valuation report from a registered valuer.
• The housing finance company or the bank providing finance for the houses appraises the property being purchased or constructed through its own technical staff.
4.6 From the perusal of records of all the borrowers it is seen that the appellant has not ensured that above conditions are 11 I.T.A. No.618, 1785& 2014/Ahd/2007 fulfilled. After ensuring the above requirements the housing finance company / banks providing housing finance issue the cheque / draft in the name of the builder or the seller of the property. This condition is most important because it ensures that the funds are disbursed to the seller of the property and not to the borrower of the loan. This ensures that the funds are used for the purpose of purchasing or constructing a house for residential purpose. Since the appellant company has not bothered about any of these conditions, it cannot be said that it has provided the loans / finances for the purposes which are envisaged in Section 36(1)(viii).
4.7 As regards its arguments that as per the provisions of 36(1)(viii) all that is required is that the assessee company should only be formed and registered with the main object of carrying on business of providing long term finance for construction / purchase of residential houses is not acceptable because it cannot be said that the Act only wanted that the company should be formed and registered for the purpose but it need not adhere to those purposes.
All that this provision quoted by the appellant means that while the main purpose should be providing finance for construction or purchase of residential houses, it can carry on some other business to some extent also. In view of the above, the disallowance made by the A.O. is confirmed and this ground of appeal is dismissed."
10.1 Similar findings were recorded by the ld. CIT(A) in his order for the AY 2003-04.
11. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. AR on behalf of the assessee while reiterating their submissions before the ld. CIT(A) contended that the assessee had produced all the relevant documents kept as security for advancing the loan before the AO and merely on the basis of enquiries in three cases, deduction can not be disallowed since assessee was in the business of providing housing finance and all the details were mentioned on the back side of the application forms. On the other hand, the ld. DR supported the findings of the ld. CIT(A)
12. We have heard both the parties and gone through the facts of the case. It is well settled that the onus is on the assessee, claiming deduction u/s 36(1)(viii) of the Act, to establish that it fulfilled the conditions stipulated in the said section.
12 I.T.A. No.618, 1785& 2014/Ahd/2007The relevant provisions of s. 36(1)(viii) read with the Notes and the Memorandum for Notes and Clauses in the Finance Bill, 1995, we find that the purpose of amending the s. 36(1)(viii) was to restrict the deduction available to the assessee in respect of any special reserves created not exceeding 40 per cent of the profits derived from the business of providing long-term finance for construction or purchase of houses in India. Therefore, the immediate source of income which is eligible for deduction under s. 36(1)(viii) must be the business of providing long-term finance for construction or purchase of houses in India for residential purposes. During the course of assessment proceedings, the AO asked the assessee to furnish details and documentary evidence of each of the property purchased / constructed from the advances given by it, along with applications made by the borrowers, seeking advance for this purpose. However, the assessee did not furnish the required details properly. On the basis of enquiries made from aforesaid three parties and the assessee having not discharged the onus that loans given by it were indeed used for purchasing and construction of any residential house , the AO denied the claim for deduction u/s 36(1)(viii) of the Act in these two assessment years. Even before the ld. CIT(A), the assessee could not establish that the money disbursed by it was used for the purpose of construction or purchase of residential houses. Accordingly, the ld. CIT(A) concluded that the assessee having failed to establish that it has provided the loans / finances for the purposes envisaged in Section 36(1)(viii), deduction was not admissible. The copies of application for advances by various borrowers placed in paperbook on page 41 to 90 submitted before us and referred to by the ld. AR are in Gujrati . The ld. AR contended that the various borrowers requested for advance for purchase and construction of houses. Apart from copies of these applications, no evidence has been referred to before us suggesting that advances given by the assessee were indeed utilized for purchase or construction of residential houses. If an assessee claimed the benefit of deduction u/s 36(1)(viii) of the Act, the onus squarely rested upon them to satisfy the revenue authorities that they fulfilled the conditions stipulated under the said provision i.e the advances given by it were 13 I.T.A. No.618, 1785& 2014/Ahd/2007 used only for the purpose of purchase or construction of residential houses. In the case under consideration, the asssessee did not establish their claim nor submitted the relevant evidence before the AO or the ld. CIT(A) that the advances given by it were indeed for purchase or construction of residential houses. Even before us situation is no better. In these circumstances, especially when there is no material before us to take a different view in the matter, we are not inclined to interefere with the findings of the ld. CIT(A). Therefore ,ground no.3 in these two appeals of the assessee is dismissed.
13. Ground no. 4 in both the appeals of the assessee relate to levy of interest u/s 234B of the Act. The levy of interest u/s 234B of the Act being mandatory [Commissioner Of Income Tax.vs Anjum M. H. Ghaswala And Others,252 ITR 1(SC), affirmed by Hon'ble Apex Court in the case of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449(SC) and in the case of CIT v. Sant Ram Mangat Ram Jewellers [2003] 264 ITR 564(SC)] while no submissions having been made before us by the ld. AR on behalf of the assessee, these grounds are dismissed..
14. No additional ground having been raised in terms of residuary ground no. 5 in the two appeals of the assessee, accordingly, this ground is also dismissed.
I.T.A. no.2014/Ahd/2007
15. Adverting now to the appeal of the Revenue for the AY 2003-04, the following are the effective grounds:
"1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs.5 lacs on account of the share application money treated as unexplained cash credit u/s 68 of the Income-tax Act.
2. On the facts and circumstances of the case and in law, learned CIT(A)-I, Surat ought to have upheld the order of the Assessing Officer to that extent."14 I.T.A. No.618, 1785& 2014/Ahd/2007
16. At the outset, the ld AR on behalf of the assessee brought to our notice that tax effect in this case is below the limits prescribed by the CBDT for filing appeals and tax effect does not include interest as per instruction no. 5 of 2007 dated 16.7.2007 . In this case tax effect on the addition of Rs.5 lakhs dispued by the Revenue in their ground of appeal is only Rs.1,83,750. The ld. DR did place any material before us disputing the aforesaid working of tax effect in terms of the CBDT instructions nor the ld. DR could point out that the case falls within any of the exceptions in CBDT instruction No.279/Misc.- 64/05-ITJ dated 24.10.2005 or earlier instruction no. 1979 dated 27.3.2000 as clarified vide subsequent instruction no. 1985 dated 29.6.2000.
17. In view of the foregoing and in the light of aforesaid instruction dated 24.10.2005 of the CBDT and decision dated 5.8.2008 of the Hon'ble jurisdictional High Court in the case of CIT Vs. Concord Phamaceuticals in tax appeal nos. 1402 to 1405 of 2007 as also consistent view taken by various High Courts in the case of CIT vs. Chhajer Packaging and Plastics P.Ltd., 300 ITR 180(Bom.),CIT Vs. Camco Colour Co,254 ITR 565(Bom.), & CIT Vs. Zoeb Y Topiwala,284 ITR 379(Bom), CIT Vs. S.Annamalai,258 ITR 675(Madras) and Hon'ble Delhi High Court in their order dated 1.8.2007 in ITA no. 683/2007 in the case of CIT Vs. Manish Bhambri, this appeal can not be entertained.
18. Respectfully following the aforesaid decisions of the Hon'ble jurisdictional High Court and other High Courts, this appeal by the Revenue is dismissed, in limine.
15 I.T.A. No.618, 1785& 2014/Ahd/200719. In the result, all the three appeals are dismissed.
Order pronounced in the open court, on this 26th day of February, 2010.
Sd/- Sd/-
(Bhavnesh Saini) (A.N. Pahuja)
Judicial Member Accountant Member
Ahmedabad,
Dated : 26th February, 2010
Pk/-
Copy to:
1. The assessee
2. ITO Ward-1,Surat
3. CIT(A)-I, Surat
4. CIT concerned By order
5. DR, "B" Bench
Deputy Registrar, ITAT, Ahmedabad