Facts of the Case

The present appeals were filed by the Revenue (Principal Commissioner of Income Tax (Central)-II) against M/s iServices India under Section 260A of the Income Tax Act, 1961 before the Delhi High Court.

During the course of hearing, the Senior Standing Counsel for the Revenue submitted that the tax effect involved in the appeals was less than ₹50,00,000, which falls below the monetary threshold prescribed by CBDT Circular No. 3/2018 dated 11.07.2018.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018.
  2. Whether the High Court should adjudicate substantial questions of law despite low tax effect.

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect in the present appeals is below ₹50 lakhs.
  • In view of CBDT Circular No. 3/2018, it was submitted that the appeals may not be pressed and the substantial questions of law need not be decided.

Respondent’s Arguments (Assessee)

  • Although not elaborately recorded in the order, the respondent/assessee stood to benefit from the application of the CBDT circular limiting litigation based on monetary thresholds.

Court Order / Findings

  • The Court recorded the statement of the Revenue regarding low tax effect.
  • It held that in terms of CBDT Circular No. 3/2018, the appeals should not be pursued.
  • Accordingly, the appeals were:
    • Disposed of as not pressed
    • Substantial questions of law were left open
    • All pending applications were also disposed of

Important Clarification

  • The Court explicitly clarified that no opinion was expressed on the merits of the case.
  • The substantial questions of law remain open, meaning they can be raised in appropriate future cases where the tax effect exceeds the prescribed limit.

Sections Involved

  • Section 260A – Appeal to High Court (Income Tax Act, 1961)
  • CBDT Circular No. 3/2018 dated 11.07.2018 – Monetary limits for filing appeals by the Revenue

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8320-DB/SKN02082018ITA7152018_154229.pdf

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