Tax Alert: Revised monetary limit for filing appeals to be applicable to pending appeals as well
Tax Alert: Revised monetary limit for filing appeals to be applicable to pending appeals as well
In line with the Governments objective of reducing litigation, the Central Board of Direct Taxes (CBDT) has been deciding monetary limits for the Revenue to file Income tax appeals before Tax Tribunals, High Courts and Special Leave Petitions (SLPs)/Appeals before Supreme Court from time to time. In 2018, the CBDT had issued Circular no. 3/2018 providing for increased monetary limits, overriding the earlier limits set in this regard. With an aim to further manage litigation, the CBDT has now significantly enhanced the monetary thresholds for filing of Income tax appeals vide Circular no. 17/2019 dated 8 August 2019.
The enhanced monetary limit is tabulated hereunder:
|
Sr No |
Appeal/ SLPs in Income-tax matters |
Monetary Limits (INR) |
|
|
Circular no. 3 of 2018 |
Circular no. 17 of 2019 |
||
|
1. |
Before Tax Tribunal |
20,00,000 |
50,00,000 |
|
2. |
Before High Court |
50,00,000 |
1,00,00,000 |
|
3. |
Before Supreme Court |
1,00,00,000 |
2,00,00,000 |
Apart from enchancing the monetary limits, the circular has also clarified that where an appeal is filed against consolidated order (i.e. single order for more than one tax year), the monetary limits shall be tested individually for every tax year. Also, where the consolidation is with respect to different taxpayers, thresholds shall be tested for each taxpayer, separately.
The circular no. 3/2018 provided that the limits shall apply to all the pending appeals, however, there was an ambiguity on the applicability of circular no. 17/2019 to pending cases. It is pertinent to note that circular no. 17/2019 does not override circular no. 3/2018 but rather updates it to the extent of revised monetary limits and gives clarification on consolidated appeals. Hence, other parts of Circular no. 3/2018 should prevail.
After issuance of circular no. 17/2019, the Hon'ble Supreme Court recently dismissed Revenue Authorities appeal[1] on the ground that the tax effect is less than INR 2 crore (the revised threshold limit as stated in Circular no. 17 of 2019). After the decision by the Hon'ble Supreme Court's and in response to representation from tax officers on applicability of revised monetary limits, the CBDT issued a communication[2] dated 20 August 2019 to the tax officers. The communication provides that the revised monetary limits as mentioned in Circular no. 17/2019 are applicable to all pending SLPs/ appeals/ cross objection/ references. It further instructs that all such appeals within the revised limits shall be withdrawn on or before 31 October 2019.
BDO Comments:
The increased monetary limits will bring much respite to the taxpayer, as it will bring an end to lot of open litigations. Further, this will reduce the burden of the courts and the tax officers, as well and thus help speed up the disposal of other appeals. A timely clarification from the CBDT on applicability of circular 17/2019 on applicability of pending appeals and consolidated appeals has put an end to avoidable litigation on respective issues. While the CBDT has directed the tax officers to withdraw all the pending appeals below the monetary limits, the taxpayer could consider requesting the tribunal / courts for early hearing and seek dismissal of appeals on the ground of tax effect below the revised monetary limits.
[1] DCIT vs MSEB Holding Company Ltd (Special Leave Petition (Civil) Diary No. 26373/2019 dated 16 August 2019)
[2] F. No. 279/Misc/ M-93/2018-ITJ