Facts of the Case

The present matter pertains to appeals filed by the Revenue before the Delhi High Court against the respondent assessee, M/s Iservices India. During the hearing, the Senior Standing Counsel appearing 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 under CBDT Circular No. 3/2018.

As a result, the Revenue expressed that the substantial questions of law raised in the appeals may not be pressed for adjudication.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below the monetary limit prescribed by 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, through its Senior Standing Counsel, acknowledged that the tax effect involved in the present appeals is below ₹50 lakhs.
  • It was submitted that in light of CBDT Circular No. 3/2018, the appeals may not be pressed.
  • Accordingly, it was implied that the questions of law need not be decided due to the low tax effect threshold.

Respondent’s Arguments (Assessee)

  • No specific arguments of the respondent are recorded in the order, as the matter was disposed of based on the Revenue’s statement regarding low tax effect 

Court’s Findings / Order

  • The Court recorded the submission made by the Revenue regarding the applicability of CBDT Circular No. 3/2018.
  • It held that since the tax effect is below ₹50,00,000, the appeals are not required to be pursued.
  • Accordingly, the Court disposed of the appeals as “not pressed”.
  • The Court further clarified that:
    • The substantial questions of law were not adjudicated.
    • The questions of law are left open for consideration in appropriate cases.
    • All pending applications were also disposed of.

Important Clarification

  • Dismissal of appeal due to low tax effect does not amount to affirmation of the lower authority’s decision on merits.
  • The questions of law remain open and can be raised in future cases where the tax effect exceeds the prescribed limit.
  • CBDT Circulars are binding on the Revenue authorities and aim to reduce litigation burden

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

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