Facts of the Case

The Revenue filed two appeals before the Delhi High Court under Section 260A of the Income Tax Act against respective assessees:

  1. Chitrakoot Merchandise Pvt. Ltd.
  2. Ambika Infratech Pvt. Ltd.

During the hearing, counsel for the Revenue submitted that the tax effect in both appeals was below ₹50,00,000, which is the monetary threshold prescribed under CBDT Circular No. 3/2018.

Issues Involved

  1. Whether appeals with tax effect below ₹50 lakhs are maintainable before the High Court.
  2. Whether substantial questions of law should be adjudicated despite low tax effect.

Petitioner’s (Revenue’s) Arguments

  • The Revenue acknowledged that the tax effect in both appeals was below ₹50,00,000.
  • It relied upon CBDT Circular No. 3/2018, which restricts filing/continuation of appeals below the prescribed monetary limit.
  • It submitted that the appeals may be disposed of accordingly without adjudicating the substantial questions of law.

Respondent’s Arguments

  • Although not elaborately recorded, the respondents effectively benefited from the applicability of the CBDT circular limiting the maintainability of such appeals.

Court’s Findings / Order

  • The Court recorded the statement of the Revenue regarding the low tax effect.
  • It held that in view of CBDT Circular No. 3/2018:
    • The appeals do not warrant adjudication.
    • The substantial questions of law are left open.
  • Accordingly, both appeals were disposed of without answering the questions of law.

Important Clarification

  • The dismissal of the appeals is not on merits.
  • The substantial questions of law remain open for consideration in appropriate cases where the monetary threshold is satisfied.
  • This ensures that legal principles are not adversely affected by dismissal due to low tax effect

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8310-DB/SKN31072018ITA3282018_150823.pd 

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