Facts of the Case

The Revenue filed appeals against the respondent assessee, Kronos Solutions India Pvt. Ltd., raising certain substantial questions of law under the Income Tax Act. However, during the hearing, it was submitted by the counsel for the Revenue that the tax effect involved in the present appeals was below ₹50 lakhs.

As per the prevailing CBDT Circular No. 3/2018 dated 11.07.2018, appeals below the prescribed monetary threshold are not required to be pursued before the High Court.

Issues Involved

  1. Whether the High Court should adjudicate substantial questions of law when the tax effect is below the monetary limit prescribed by CBDT.
  2. Whether such appeals are maintainable in light of CBDT Circular No. 3/2018 

Petitioner’s (Revenue) Arguments

  • The Revenue initially filed the appeal raising substantial questions of law.
  • However, during proceedings, it was conceded that the tax effect is below ₹50 lakhs, falling within the threshold limit prescribed under CBDT Circular.

Respondent’s Arguments

  • The respondent relied upon the CBDT Circular, asserting that the appeal should not be entertained due to low tax effect.
  • It was implied that the appeal lacked maintainability under the binding circular.

Court’s Findings / Order

  • The Court recorded the statement made by the Revenue regarding the low tax effect.
  • It held that in view of CBDT Circular No. 3/2018, the substantial question of law need not be examined.
  • Accordingly, the appeals were disposed of without answering the substantial questions of law, leaving them open for consideration in appropriate cases.

Important Clarification

  • The Court did not adjudicate on merits of the case.
  • The substantial questions of law were left open, meaning they may be decided in future cases where the tax effect exceeds the prescribed limit.
  • The dismissal is purely procedural due to the monetary threshold policy.

Sections Involved

  • Relevant provisions under the Income Tax Act, 1961 relating to appeals before the High Court (Section 260A).
  • CBDT Circular No. 3/2018 dated 11.07.2018 governing monetary limits for filing appeals.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8314-DB/SKN30072018ITA4952018_152124.pdf

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