Punjab & Haryana H.C : the respondentassessee was an industrial establishment engaged in manufacturing/processing of goods, and as such, was entitled to a deduction under s. 80-I of the 1961 Act

High Court Of Punjab & Haryana

CIT vs. Oscar Laboratories (P) Ltd.

Section 260A, 268A, CPC order 2, r. 2

Asst. Year 1988-89

J.S. Khehar & Nawab Singh, JJ.

IT Appeal No. 171 of 2002

26th February, 2009

Counsel Appeared :

Ms. Urvashi Dhugga, for the Appellant : V.P. Gupta & Pritam Saini, for the Respondents

JUDGMENT

J.S. Khehar, J. :

The respondent-assessee submitted a return for the asst. yr. 1988-89, declaring its income at Rs. 76,257, on 6th Feb., 1990. The AO in exercise of the power vested in him under s. 143(3) of the IT Act, 1961 (hereinafter referred to as the 1961 ‘Act’), vide his order dt. 28th Dec., 1990, determined the income-tax liability of the respondent-assessee at Rs. 1,02,518. Dissatisfied with the order passed by the AO (dt. 28th Dec., 1990), the respondent-assessee preferred an appeal before the CIT(A). The CIT(A), vide his order dt. 25th Sept., 1991, partly allowed the appeal preferred by the respondent-assessee. The CIT(A), arrived at the conclusion, that the respondentassessee was an industrial establishment engaged in manufacturing/processing of goods, and as such, was entitled to a deduction under s. 80-I of the 1961 Act. The appellate authority, accordingly, directed the AO to allow the respondent-assessee’s claim for a deduction under s. 80-I of the 1961 Act.

2. Dissatisfied with the order passed by the said appellate authority, the Revenue preferred an appeal against the order passed by the CIT(A), dt. 25th Sept., 1991, before the Income-tax Appellate Tribunal (hereinafter referred to as the ‘Tribunal’). The Tribunal allowed the appeal vide an order dt. 18th Nov., 1999. The Tribunal arrived at the conclusion, that the CIT(A) was not justified in arriving at the conclusion, that the respondent-assessee was an industrial undertaking engaged in the processing of “articles” or “things”. The Tribunal concluded, that merely on account of the fact, that the respondent-assessee had been incorporated with the object of manufacturing drugs, and the mere fact that the drugs in question were sold in the name of the assessee, would not constitute a sufficient basis for concluding, that the assessee was an industrial undertaking engaged in the business of manufacturing of “articles” or “things”. Accordingly, the Tribunal held that the assessee was not entitled to deduction under s. 80-I of the 1961 Act. A civil miscellaneous application was filed by the respondent-assessee against the order passed by the Tribunal dt. 18th Nov., 1999 before the Tribunal itself, requiring the Tribunal to recall its order dt. 18th Nov., 1999 on the ground, that the respondent-assessee had not been served in the proceedings, which had culminated with the order of the Tribunal dt. 18th Nov., 1999, as the respondent-assessee had been deprived of an opportunity of projecting its claim before the Tribunal. Having considered the plea raised by the respondent- assessee, the Tribunal vide its order dt. 25th Sept., 2000 recalled the ex parte order passed by it on 18th Nov., 1999. On a reconsideration of the controversy, the Tribunal vide order dt. 14th March, 2002, dismissed the appeal preferred by the Revenue. It is, therefore, that the Revenue has preferred the instant appeal so as to impugne the order passed by the CIT(A), dt. 25th Sept., 1991, as also, the order passed by the Tribunal dt. 14th March, 2002. When the matter was taken up for hearing on 21st Jan., 2009, a preliminary objection was raised by the learned counsel for the respondent-assessee, on the issue of maintainability of the instant appeal. Reliance was placed on s. 268A of the 1961 Act, as also, the instructions issued by the CBDT, laying down monetary limits for regulating the filing of appeals. It was the vehement contention of the learned counsel for the respondent-assessee, that the instant appeal had been preferred by the Revenue in clear violation of the mandate of the instructions issued by the CBDT. It was submitted, that the instructions under reference had acquired statutory status after the insertion of s. 268A of the 1961 Act.

On 21st Jan., 2009, learned counsel for the appellant sought an adjournment so as to enable her to obtain instructions and to prepare herself on the preliminary objection. Thereafter, the matter was taken up for hearing on 19th Feb., 2009 solely on the preliminary objection raised on behalf of the respondent-assessee. During the course of hearing, learned counsel for the appellant vehemently repudiated the preliminary objection raised by the learned counsel for the respondent-assessee. The claim of the appellant Revenue is based on Instruction No. 1777, dt. 4th Nov., 1987. A copy of the aforesaid instruction was made available to us during the course of hearing. Relevant extract from the aforesaid instruction is being reproduced hereunder : “At present, Board’s approval is required for filing reference application under s. 256(2) before the High Court, where the application under s. 256(1) is rejected by the Tribunal. Similarly, Board’s approval is required for accepting or contesting any adverse order of the High Court. Board’s approval is also required for contesting before the High Court or the Supreme Court, the adverse orders of the Settlement Commission of the Tribunal for forfeited properties. This area of the Board’s functions has been reconsidered. It has been now decided that the decision to accept or contest adverse judgments of High Courts/Tribunals etc. will be taken by the concerned Chief CIT.

The Board desire that, while deciding the question of filing an appeal/reference in respect of an adverse judgment of High Court/ Tribunal, etc., the chief CIT should follow the following guidelines : Monentary Limits : Filing of Departmental appeal/refrence should be selective. Guidlines were laying down laving down monentary limits of revenue effect of Rs. 10,000 for filing appeals before Tribunal, Rs. 30,000 for reference before High Court and Rs. 60,000 for appeals to Supreme Court (Instruction Nos. 1573, dt. 12th July, 1984 and 1612, dt. 6th April, 1985). These guidelines should be adhered to, subject to the exceptions given below. For the purpose of working out monetary limit, the cumulative revenue effect of the issue in the assessee’s case for all the years upto the year for which returns have been filed, should be taken into consideration. Where the same issue is involved in different cases of a group (e.g. industrial house, family, connected cases etc.), the revenue effect of the group and not the individual case should be taken into account for the purpose of the monetary limit. While applying the monetary limits, the effect of carry-forward, effect of consequential edition/deletions in other years should be kept in view. In cases of firms/AOP the revenue effect, in cases of partners/members be also taken into account.

(ii) Question of law : Where a question of law arises for the first time before the High Court concerned, it should be contested irrespective of revenue. Where an adverse judgment is delivered by a High Court in such cases, stay of the operation of the judgment should be obtained either from the High Court itself or from the Supreme Court.

(iii) Other adverse judgments need to be contested irrespective of the revenue effect :

The judgment relating to the following should be contested irrespective of revenue effect :

(a) Where prosecution proceedings are contemplated against the assessee;

(b) Where strictures have been passed against the Department or its officers;

(c) Where revenue audit objection in the case has been accepted by the Department;

(d) Where Board’s order, notification, instruction or circular is the subject-matter of adverse order;

(e) Where in respect of one assessment year the order is contested in the case of an assessee for any reason, the adverse judgment for other years in issue in that case, should also be contested irrespective of the amount involved so that Department’s case on the issue is not prejudiced on the ground that in respect of some year the Department has already accepted the assessee’s case; A report to the Board should be sent to in respect of the judgments containing strictures or which are contrary to Board’s orders, notifications, instructions, circulars etc.

(iv) Adverse judgments which need not be contested :

(a) Where the adverse judgment is in accordance with the view in the Board’s instruction or circulars etc.

(b) Where the adverse judgment is in respect of mere procedural failure of the assessee like non- signing of appeal memo by the appellant or Form 12 by one of the partners etc.;

(c) Adverse judgment, in respect of protective order revered the substantive order made by the Department is upheld, and becomes final.

(v) Adverse judgment where Board’s prior will is necessary for further contest :

(a) SLPs under Art. 136 of the Constitution are filed before the Supreme Court only in consultation with Ministry of Law, Delhi, and on the advice of senior law officers—AG, SG or ASG. Therefore, where the Chief CITs decides to contest, the adverse judgment by filing SLP before the Supreme Court, they should send the proposal to the Board for further processing.

(b) Where some Chief CITs have already accepted an adverse judgment on an issue but the concerned Chief CIT has some reservations about it and wants to contest that view, Board’s approval may be obtained. Similarly, where other Chief CITs are contesting the adverse view, but the concerned Chief CIT wants to accept that view, Board’s prior approval may be obtained.

(c) Where the assessee involved is a public sectorundertaking, and the CIT wants to contest the adverse judgment, he should make a reference to the Board. If there is no agreement between the undertaking and the Department at the Board’s level, the matter will be referred to Ministry of Law, whose opinion will be binding on the undertaking and the Department.(d) Where the revenue effect of the case is over Rs. 5 lakhs and there is disagreement (between), the CIT and the standing counsel in regard to acceptance or non-acceptance of the judgment, Board’s approval may be obtained. Where for exceptional reasons, the CIT wants to deviate from the above guidelines, he must approach the Board, well in time keeping the period of limitation in mind.

An Integrated Judicial Reference System (ITRS) has been set up in the office of the Chief CIT, Hyderabad and is now operative. The acceptance or otherwise of adverse judgments of High Court or Special Benches of Tribunal should be communicated to this centre every fortnight so that this information is available to all other charges, and there is uniformity in the approach of the Department in different charges. These instructions will apply to litigation under other direct taxes also e.g., wealth-tax, gift-tax, estate duty etc. These instructions may please be brought to the notice of all the CITs in your charge”. Relying on the aforesaid instruction, it is acknowledged by the learned counsel for the appellant-Revenue, that the instruction vests authority in the Chief CIT to decide, inter alia, whether or not, the Revenue should prefer an appeal to the High Court against an order passed by the Tribunal. According to the learned counsel, the aforesaid instruction also includes guidelines to be kept in mind by the CIT while deciding whether an appeal should be filed or should not be filed. Guidelines, according to the learned counsel, are only directory and never mandatory. For filing a reference/appeal before a High Court, the monetary limit stipulated under the instruction referred to above, was that the tax effect should be more than Rs. 30,000. The instruction, according to the learned counsel, also delineated exceptions i.e., circumstances where the monetary limit prescribed may not be adhered to. Illustratively, it was pointed out that monetary limits laid down by the instruction were exempt in a case where “a question of law arises for the first time before the High Court”. Other adverse judgments, which need to be contested irrespective of the revenue effect could also be appealed against. Appeals could also be filed in cases where prosecution proceedings are contemplated, where strictures have been passed against the Revenue or its officers, where an audit objection had been accepted by the Revenue, where the order under challenge is against an order of the CBDT, and in cases where for a particular year, the Revenue has challenged an order against the assessee, and the same issue arises again for a subsequent year.

Learned counsel for the appellant-Revenue has raised a series of submissions to repudiate the preliminary objection raised on behalf of the respondent-assessee. Firstly, it is contended that the Instructions issued by the CBDT, laying down limits (on the basis of tax effect) for preferring appeals, are not mandatory, but are merely directory. The Instruction dt. 4th Nov., 1987 laying down monetary limits for regulating the filing of appeals, according to the learned counsel for the appellant, is subject to a number of exceptions, which are apparent from the Instruction dt. 4th Nov., 1987, reproduced hereinabove. Secondly, it is the contention of the learned counsel for the appellant, that it is permissible for the Revenue under s. 260A of the 1961 Act, to prefer an appeal so as to agitate a “question of law” arising for determination in a decision rendered by the Tribunal, irrespective of the tax effect involved, and that, the aforesaid statutory right cannot be interfered with. In this behalf, it is the contention of the learned counsel for the appellant, that the admission of the present appeal by itself, by a Division Bench of this Court, on 29th Oct., 2002, establishes that a substantial “question of law” arises for determination in the present appeal, and as such, the right of the Revenue to have an illegality corrected cannot be objected to. Thirdly, it is submitted that this Court had already pronounced a verdict on the instant preliminary issue in the case of Rani Paliwal vs. CIT (2003) 185 CTR (P&H) 333 : (2004) 268 ITR 220 (P&H), wherein relying on the judgments rendered by other High Courts, as well as, by the apex Court, this Court concluded, that the High Court was obliged to decide an appeal preferred by the Revenue on merits, even though, the tax effect involved therein was lower than the limit prescribed in the relevant instruction issued by the CBDT (requiring the Revenue not to prefer an appeal). It was pointed out, that besides the judgment of the jurisdictional High Court referred to above, there were judgments of other High Courts, as well as, of the Supreme Court, in favour of the proposition being canvassed by the learned counsel for the appellant-Revenue. And fourthly, it is contended by the learned counsel for the appellant, that an objection of the nature raised by the respondentassessee herein, should have been raised by the respondent-assessee before the Tribunal, and since, the respondent-assessee did not raise any such objection before the Tribunal, where the Revenue was in appeal against the same order passed by the CIT(A) dt. 25th Sept., 1991, despite the fact that the tax effect on the respondent-assessee was less than that prescribed under the prevalent instruction at that time, it is not open to the respondent-assessee to agitate this issue for the first time before this Court.

The submissions advanced by the learned counsel for the appellant-Revenue were vehemently repudiated by the learned counsel for the respondent-assessee. The first contention advanced by the learned counsel for the respondent-assessee is that, instructions issued by the CBDT, from time to time stipulating monetary limits for filing of appeals, were granted statutory status with the insertion of s. 268A into the IT Act, 1961, by the Finance Act, 2008 with retrospective effect from 1st April, 1999. The second contention advanced by the learned counsel for the respondentassessee is based on Instruction No. 1979, dt. 27th March, 2000, issued by the CBDT, whereby other instructions issued by the Board, as well as, Instruction No. 1777 dt. 4th Nov., 1987, relied upon by the learned counsel for the appellant, came to be superseded. The Instruction dt. 27th March, 2000, relied upon by the respondent-assessee, which was made available to us during the course of hearing, is being reproduced hereunder :

“Reference is invited to the Board’s Instruction No. 1903, dt. 28th Oct., 1992 (see clarification five) and Instruction No. 1777, dt. 4th Nov., 1987 (see clarification seven), wherein monetary limits of Rs. 25,000 for Departmental appeals (in income-tax matters) before the Tribunal, Rs. 50,000 for filing reference to the High Court and Rs. 1,50,000 for filing appeal to the Supreme Court were laid down.

2. In supersession of the above instruction, it has now been decided by the Board that appeals will be filed only in cases where the tax effect exceeds the revised monetary limits given hereunder : (i) Appeal before the Tribunal (in income-tax matters) Rs. 1,00,000 (ii) Appeal under s. 260A/reference under s. 256(2) before the High Rs. 2,00,000 Court (iii) Appeal in the Supreme Court Rs. 5,00,000 The monetary limits would apply with reference to each case, taken singly. In other words, in group cases, each case should individually satisfy the new monetary limits. The working out of monetary limits will, therefore, not take into consideration the cumulative revenue effect as envisaged in the Board’s earlier instruction referred to above.

3. Adverse judgments relating to the following should be contested irrespective of revenue effect : (i) where Revenue audit objection in the case has been accepted by the Department; (ii) where the Board’s order, notification, instruction or circular is the subject-matter of an adverse order; (iii) where prosecution proceedings are contemplated against the assessee; (iv) where the constitutional validity of the provisions of the Act is under challenge. SLPs under Art. 136 of the Constitution are filed before the Supreme Court only in consultation with the Ministry of Law. Therefore, where the Chief CITs, decides to contest an adverse judgment by filing SLP before the Supreme Court, they should send the proposal to the Board for further processing. These instructions will apply to litigation under other direct taxes also, e.g. wealth-tax, gift-tax, estate duty etc. These monetary limits will not apply to writ matters. This instruction will come into effect from 1st April, 2000.” Based on the Instruction dt. 27th March, 2000, it is the contention of the learned counsel for the respondent-assessee, that the tax effect of the instant appeal, in case of its success, would be less than Rs. 2,00,000 i.e., less than the prescribed limit for filing an appeal before this Court. It is also submitted that the instant case does not fall in any of the exceptions enumerated in the instruction itself, and as such, the filing of the instant appeal transgresses the mandate of the Instruction dt. 27th March, 2000. Thirdly, learned counsel for the respondent-assessee placed reliance on the judgment rendered by this Court in CIT vs. Haryana Telecom Ltd. (IT Appeal No. 517 of 2007, decided on 16th Sept., 2008), wherein it has been concluded, that appeals filed by the Revenue overlooking monetary limits prescribed in instructions issued by the CBDT, need not be decided on merits, and as such, the questions of law raised therein had been left open. It is also pointed out, that besides the judgment of the jurisdictional Court, referred to above, there were judgments of other High Courts, as well as, of the Supreme Court in favour of the proposition being canvassed by the respondent-assessee. The fourth contention by the learned counsel for the respondentassessee is, that the respondent-assessee could not have objected to the filing of the appeal by the Revenue before the Tribunal because s. 268A of the IT Act, 1961 had not been inserted into the

1961 Act when the said appeal was filed, heard and disposed of by the Tribunal. All the same, it is contended that an independent plea is available to the respondent-assessee on the issue of maintainability of the instant appeal before this Court. According to the learned counsel, this plea cannot be denied to the respondent-assessee, even if he had not pressed a plea of a similar nature available to the respondent-assessee before the Tribunal.

10. In the sequence of facts noticed hereinabove, reference in the first instance, must be made to s. 119 of the 1961 Act, whereunder the CBDT was authorised to issue orders, instructions or directions to IT authorities for proper administration of the provisions of the 1961 Act. It is common case of the learned counsel for the rival parties, that the instructions relied upon by the learned counsel for the Revenue dt. 4th Nov., 1987, as also, the instruction relied upon by the learned counsel for the respondent-assessee dt. 27th March, 2000, were at least in the first instance, issued under s. 119 of the 1961 Act. Sec. 119 of the 1961 Act, relied upon by the learned counsel for the parties, is being extracted hereunder : “119. Instructions to subordinate authorities.—(1) The Board may, from time to time, issue such orders, instructions and directions to other IT authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board : Provided that no such orders, instructions or directions shall be issued— (a) so as to require any IT authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the CIT(A) in the exercise of his appellate functions. (2) Without prejudice to the generality of the foregoing power, (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of ss. 115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK, 139, 143, 144, 147, 148, 154, 155, 158BFA, sub-s. (1A) of s. 201, ss. 210, 211, 234A, 234B, 234C, 271 and 273 or otherwise), general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other IT authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any IT authority, not being a CIT (A) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; (c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely : (i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and (ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such deduction is claimed : Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament.” Whilst it is the contention of the learned counsel for the appellant-Revenue that proviso (a) under s. 119(1) of the 1961 Act was an embargo on the CBDT, restraining it from issuing any instruction to any of the IT authorities, how assessment in a particular case should be made, or the manner in which a particular assessment was to be determined. Likewise, proviso (b) under s. 119(1) was an embargo restraining the CBDT, from interfering in the discretion vested with the appellate authority regarding the manner in which an appeal was to be disposed of. Accordingly, it was the vehement contention of the learned counsel for the respondent-assessee based on the words “… and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board…” incorporated in sub-s. (1) of s. 119 of the 1961 Act, were in the nature of a mandate, and that, the instructions issued by the CBDT, fixing monetary limits for the purpose of regulating the filing of appeals, were binding. Even though, learned counsel for the rival parties acknowledged, that the Instructions dt. 4th Nov., 1987 (relied upon by the appellant-Revenue) and 27th March, 2000 (relied upon by the respondent-assessee) were issued under s. 119 of the 1961 Act, yet we are satisfied that it is no longer necessary to treat the Instruction dt. 27th March, 2000, relied upon by the respondentassessee, and which constitutes the foundation of the preliminary objection raised on its behalf, as having been issued under s. 119 of the 1961 Act, because under a deeming fiction of law, the aforesaid instruction is to be accepted as having been issued under s. 268A(1) of the 1961 Act.

Insofar as the second contention of the learned counsel for the appellant-Revenue is concerned, it is essential to make a reference to s. 260A of the 1961 Act. The aforesaid provision is being extracted hereunder : “260A. Appeal to High Court.—(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief CIT or the CIT or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub- section shall be— (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief CIT or CIT; (b) omitted. (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which— (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Tribunal, by reason of a decision on such question of law as is referred to in sub-s. (1). (7) Save as otherwise provided in this Act, the provisions of the CPC, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.” Based on sub-s. (1) of s. 260A of the 1961 Act, it is the contention of the learned counsel for the appellant-Revenue, that the provisions of the IT Act, 1961 authorise the Revenue to prefer an appeal to the High Court “from every order passed in appeal by the Appellate Tribunal”, subject to the condition that the Revenue can satisfy the High Court, that the case involves a substantial question of law. This right, according to the learned counsel, is unbridled and unconditional. It is also the contention of the learned counsel for the appellant, that the very fact that the instant appeal was admitted for consideration by this Court, was sufficient to infer that a substantial question of law was involved in the instant appeal. It is, accordingly, asserted that the appellant-Revenue cannot be restrained by any instruction issued by the CBDT, from filing an appeal wherein a substantial question of law arises for consideration. In this behalf, the Court’s attention has been invited to the fact, that the instant appeal was admitted for regular hearing by a Division Bench of this Court on 29th Oct., 2002. Another submission of the learned counsel for the appellant, also based on s. 260A of the 1961 Act, emerges from sub-s. (4), which mandates, that an appeal shall be heard only on the question formulated by the Court, and that, it is open to the assessee to argue that “…the case does not involve such question…”. It is, therefore, the submission of the learned counsel for the appellant, that it is not even open to the respondent-assessee to raise the instant preliminary objection, as the only right vested in the assessee is to oppose the appeal on merits on the questions formulated by the Court. Relying on sub-s. (5) of s. 260A of the 1961 Act, it is also the contention of the learned counsel for the appellant, that it is imperative for this Court to deliver a judgment on all the questions of law formulated, and as such, it is not open to this Court to excuse itself from rendering a decision on merits. Lastly, reliance was placed on sub-s. (7) of s. 260A of the 1961 Act in order to assert, that the provisions of the CPC relating to appeals to High Courts, were applicable mutatis mutandis to appeals preferred by the Revenue against orders passed by the Tribunal. In this behalf, the contention of the learned counsel for the appellant-Revenue was, that since there was a bar imposed on the Revenue based on tax effect (laid down in instruction issued by the CBDT) from preferring an appeal, the respondent-assessee having not raised a plea based thereon before the Tribunal, was barred from doing so before this Court in view of the mandate of order II, r. 2 of the CPC.

13. As against the last submission advanced by the learned counsel for the appellant on the basis of the provisions of the CPC, learned counsel for the respondent-assessee has placed reliance on cl. (a) of sub-s. (6) of s. 260A of the 1961 Act. According to the learned counsel, the aforesaid provision authorizes this Court to determine any issue, including an issue which “has not been determined by the Tribunal”. It is, therefore, the vehement contention of the learned counsel for the respondent-assessee, that the preliminary objection raised by the respondent-assessee based on s. 268A of the 1961 Act, is very much maintainable, and that, the same cannot be shut out by the appellant-Revenue. In this behalf, learned counsel for the respondent-assessee has raised two further pleas, namely, that s. 268A of the 1961 Act was not available on the statute book when the appeal was decided by the Tribunal, and that, the instant preliminary objection constitutes a pure question of law which can be raised at any time.

14. Having given our thoughtful consideration to the issue advanced by the learned counsel for the rival parties, as has been noticed in the foregoing para, we are satisfied that the maintainability of the appeal filed by the Revenue before the Tribunal, was an issue entirely different from the maintainability of the appeal at the hands of the Revenue before this Court. Separate and distinct parameters are laid in the instructions for filing appeals before the Tribunal, as against the ones prescribed, for approaching this Court in appeal under s. 260A of the 1961 Act. As such, we are of the view that it makes no difference whatsoever to the issue canvassed at the hands of the respondent-assessee before this Court, whether or not, such an objection was raised when the Revenue preferred an appeal before the Tribunal. We are also of the view, that the submissions advanced by the learned counsel for the respondent-assessee, as have been noticed in the foregoing para, also deserve to be accepted. As such, we hereby endorse both the submissions advanced at the hands of the learned counsel for the respondent-assessee, as have been noticed hereinabove. Accordingly, we find no merit in the plea raised by the learned counsel for the appellant-Revenue under s. 260A(7) of the 1961 Act, read with order II, r. 2 of the CPC.

Learned counsel for the rival parties have cited before us judgments rendered by High Courts, as also, by the Supreme Court to determine the issue of maintainability of the instant appeal. However, none of the judgments relied upon by the learned counsel for the rival parties (which will be dealt with in a later part of this order) can be considered as an exposition on s. 268A of the 1961 Act, or the effect thereof. It is, therefore, that we are satisfied that the instant question posed by the learned counsel for the respondent-assessee cannot be disposed of merely on the basis of the judgments relied upon by the learned counsel for the rival parties. Despite the aforesaid factual/legal position, we shall deal with the judgments relied upon by the learned counsel for the rival parties, and determine the effect thereof, so as to be able to analyse the direction of the march of judicial opinion on the issue in hand.

Learned counsel for the appellant invited this Court’s attention, first of all, to the decision rendered by the Rajasthan High Court in CIT vs. Rajasthan Patrika Ltd. (2002) 178 CTR (Raj) 414 : (2002) 258 ITR 300 (Raj). From the aforesaid judgment, learned counsel for the appellant invited the pointed attention of this Court to the following observations on the issue in hand : “Mr. Ranka further submits that in any case the tax effect is meagre, i.e., Rs. 30,000, therefore, the appeal is not maintainable. There is a circular of the Board that when the tax effect is not more than Rs. 50,000, no appeal should be filed. He also brought to our notice a latest decision of the apex Court in the case of Tamil Nadu Industrial Investment Corporation Ltd. vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC) wherein their Lordships have taken the view that in fact the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to s. 145 of the IT Act or illegal in any form. It is meant for a uniform administration of law by all the IT authorities in a specific situation and is, therefore, validly issued under s. 119 of the IT Act. As such the circular would be binding on the Department. Mr. Mathur, learned counsel for the Revenue, also brought to our notice the decision of the apex Court in the case of CIT vs. Hero Cycles (P) Ltd. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC), wherein their Lordships have taken the view that the circulars can bind the ITO but will not bind the appellate authority or the Tribunal or the Court or even the assessee.

It is true that in the case of the Supreme Court, which has been referred to by Mr. Ranka, learned counsel for the assessee, their Lordships held that a circular has binding effect, but the issue before the Supreme Court relates to the circular, which interprets the statute for the uniformity of the decisions in the Department. But, the circular before us is as to whether the appeal is to be filed or not ? These are administrative instructions and in spite of these administrative instructions if the Department prefers to file an appeal or make a reference to this Court, in our view, on such administrative instructions, the appeal of the Department should not be dismissed or the reference should not be rejected. We do not find any infirmity in disposing of the appeal on the merits.” Reliance was then placed on the decision rendered by the Madras High Court in CIT vs. P.S.T.S. Thiruvirathnam & Sons (2004) 186 CTR (Mad) 400 : (2003) 261 ITR 406 (Mad), wherefrom learned counsel for the appellant drew our attention to the following observations made therein : “Counsel for the assessee, however, submitted that the question should not be answered by us as according to him under the circular issued by the CBDT if the amount of tax involved is less than Rs. 30,000, the Department is not to pursue the matters in the higher forum. We have perused the circular of 4th Nov., 1987. It is not an unqualified embargo on the Revenue proceeding with the matter where the amount of tax in issue is Rs. 30,000 or less. Several exceptions are set out in that circular. If the assessee wanted the benefit of that circular it should have put the Revenue on notice when the Revenue applied for having the question referred so that the Revenue could gather the relevant material, if any, to show that the matter was within the excepted category.

After the question has been referred to us, we cannot now permit the assessee to raise this objection.” Reference was also made to the decision rendered by this Court in Rani Paliwal vs. CIT (supra). Learned counsel for the appellant invited the Court’s attention to one of the questions framed for adjudication in Rani Paliwal’s case (supra) as under : “(i) Whether the Tribunal, on the facts and in the circumstances of the case, erred in law in not dismissing the appeals of the Department/Revenue in view of the Board’s Circular No. F. No. 279/126/1998-ITJ, dt. 27th March, 2000 ?”

The aforesaid question was answered by this Court as under : “As regards question No. (i), it is urged that in view of the Board’s Circular No. F-279/126/1998ITJ, dt. 27th March, 2000, the appeals filed by the Department were not maintainable because the tax effect did not exceed Rs. 1,00,000 in each assessment year and, therefore, according to the circular, the Department could not prefer an appeal. From the perusal of the order of the Tribunal, it is clear that no such plea was raised before the Tribunal and, therefore, we are not allowing the assessee to raise this plea for the first time before us. In any case, the Board’s circular is only an instruction issued to the IT authorities not to file appeals where the tax effect is less than Rs. 1,00,000. The Tribunal is not bound by any such instruction and once the Department files an appeal, the Tribunal was bound to decide the same on the merits. This question, in our opinion, is not a question of law.” Reference was also made to the decision rendered by the Allahabad High Court in Jugal Kishore Arora vs. Dy. CIT (2004) 192 CTR (All) 174 : (2004) 269 ITR 133 (All), wherein the Allahabad High Court, inter alia, held as under : “As regards the contention that the appeal should not have been entertained in view of the direction of the CBDT dt. 27th March, 2000, we are of the opinion that the instructions of the CBDT regarding filing of appeals are only internal matters of the Department, and the assessee cannot object to filing of an appeal despite such an instruction. The appeal is clearly maintainable before the Tribunal on behalf of the Department under s. 253(2) of the IT Act, and this right to file an appeal is a statutory right and cannot be taken away or prohibited by executive instructions. Moreover, the Instructions itself states that an appeal can be filed if the matter is of a recurring nature. Thus, there is no force in these appeals and they are dismissed.”

Learned counsel for the appellant also invited this Court’s attention to a judgment rendered by this Court in CIT vs. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H), wherein on the issue of maintainability, it was observed as under : “As far as the issue as to whether the circular prescribing limits for filing appeals before the Courts or the Tribunals is concerned, different Courts have taken different views as to whether in case an appeal is filed, which involves tax effect less than the amount prescribed in the circular for filing the appeal, still the Court/Tribunal is bound to reject the same as such or to dispose of it on merits. In CIT vs. Camco Colour Co. (2002) 173 CTR (Bom) 255 : (2002) 254 ITR 565 (Bom), the Bombay High Court refused to entertain an appeal which was filed having tax effect less than what was prescribed in the instructions for filing appeal in the High Court. The same view was reiterated by the Court in CIT vs. Pithwa Engg. Works (2005) 197 CTR (Bom) 655 : (2005) 276 ITR 519 (Bom). Taking a contrary view, this Court in Rani Paliwal vs. CIT (2003) 185 CTR (P&H) 333 : (2004) 268 ITR 220 (P&H), wherein an appeal filed by the assessee, raising the issue as to whether the Tribunal erred in law in not dismissing the appeal of the Revenue keeping in view the Board’s Circular dt. 27th March, 2000, prescribing limits for filing appeals before the Tribunal, was dismissed holding that the Tribunal is not bound by any such instructions and once the appeal is filed, the Tribunal was bound to decide the same on the merits. A similar view has been expressed by the Rajasthan High Court in CIT vs. Rajasthan Patrika Ltd. (2002) 178 CTR (Raj) 414 : (2002) 258 ITR 300 (Raj), wherein it was held that the circulars providing for quantum of tax which is fixed for filing appeals before various forums are administrative in nature. If the Department prefers to file an appeal or make a reference to the Court, the same should not be dismissed by relying upon such administrative instructions. Accordingly, the appeal filed by the Revenue was heard and decided on the merits.

In CIT vs. Blaze Advertising (Delhi) (P) Ltd. (2002) 173 CTR (Del) 482 : (2002) 255 ITR 460 (Del), the Delhi High Court held that the circular issued by the Board does not, in any way, prohibit or curtail the power of the Tribunal for making a reference and in any case, the statutory right of the Tribunal to refer a case to the High Court for its opinion under s. 256(1) of the Act cannot be taken away by the Board by issuing a circular or otherwise. In CIT vs. Hero Cycles (P) Ltd. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC), the Hon’ble Supreme Court held that the circular issued by the Central Board of Direct Taxes (for short, “the Board”) can bind the ITO, but will not bind the appellate authority or the Tribunal or the Court or even the assessee.

Accordingly, it is held that there is no merit in the plea of the assessee to the effect that the present appeal filed by the Revenue should be dismissed. Rather, we hold that the circulars issued by the Board fixing the quantum of tax for filing appeals before various forums are not binding on the Tribunal or the Courts and once the matter is before the Court or the Tribunal, the same has to be decided on its own merits.”

17. As against the aforesaid submissions advanced by the learned counsel for the appellant, learned counsel for the respondent-assessee has relied upon various judgments rendered by different High Courts in the country. First of all, reliance was placed on the decision rendered in CIT vs. Smt. Nayana P. Dedhia (2004) 192 CTR (AP) 526 : (2004) 270 ITR 572 (AP), wherein the Andhra Pardesh High Court, relying on the decision rendered by the Supreme Court in UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC), held as under :

“…..The circular had admittedly been issued by the CBDT under s. 119(1) of the Act. What is the scope of such circulars should not detain us because of the authoritative pronouncement of the Hon’ble Supreme Court reported in UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC). The Supreme Court noted :‘What is the status of these circulars ?

Sec. 119(1) of the IT Act, 1961, provides that, ‘the CBDT may, from time to time, issue such orders, instructions and directions to other IT authorities as it may deem fit for the properadministration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. Provided that no such orders, instructions or directions shall be issued (a) so as to require any IT authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the AAC in the exercise of his appellate functions’. Under sub-s. (2) of s. 119, without prejudice to the generality of the Board’s power set out in sub-s. (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions, not being prejudicial to assessees, as to the guidelines, principles or procedures to be followed in the work relating to assessment. Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under s. 119 of the IT Act which are binding on the authorities in the administration of the Act. Under s. 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in s. 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal laws so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorised as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities.’

The Supreme Court, in this judgment, which is clear from the para quoted above, held in no uncertain terms that : (a) the authorities responsible for administration of the Act shall observe and follow any such orders, instructions and directions of the Board; (b) such instructions can be by way of relaxation of any of the provisions of the section specified therein or otherwise; (c) the Board has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions by issuing circulars in exercise of its statutory powers under s. 119 of the IT Act; (d) the circulars can be adverse to the IT Department, but still, are binding on the authorities of the IT Department, but cannot be binding on the assessee, if they are adverse to the assessee; (e) the authority, which wields the power for its own advantage under the Act, has a right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law by issuing instructions in terms of s. 119 of the Act.

This judgment leaves no room to doubt that the Tribunal was right in holding that the IT authorities could have not selected the case for detailed scrutiny in view of the circular issued by the Board. Based on the judgment rendered by the Supreme Court in UCO Bank’s case (supra) and the judgment rendered by the Andhra Pradesh High Court in Smt. Nayana P. Dedhia’s case (supra), it is the vehement contention of the learned counsel for the respondent-assessee, that instructions issued by the CBDT under s. 119(1) of the 1961 Act, have binding effect on the Revenue, and have to be followed by the officers of the Revenue Department. On the pointed issue, learned counsel for the respondent-assessee also relied upon the decision rendered by the Madras High Court in CIT vs. Ideal Garden Complex (P) Ltd. (2008) 307 ITR 176 (Mad), wherein the Court opined as under : “Thus, following the long line of case law reported in CIT vs. Rajasthan Patrika Ltd. (2002) 178 CTR (Raj) 414 : (2002) 258 ITR 300 (Raj) and CIT vs. P.S.T.S. Thiruvirathnam & Sons (2004) 186 CTR (Mad) 400 : (2003) 261 ITR 406 (Mad) to which one of us is a party (K. Raviraja Pandian, J.), CIT vs. Digvijay Singh (2007) 213 CTR (MP) 490 : (2007) 292 ITR 314 (MP) and CIT vs. Camco Colour Co. (2002) 173 CTR (Bom) 255 : (2002) 254 ITR 565 (Bom), this Court held that the uniform line of judicial opinion is that if the tax effect is less than what is stated in the circular, the Revenue need not agitate the issue on appeal and that the circular is binding on the Revenue.”

Likewise, reference was made to the decision rendered by the Allahabad High Court in CIT vs. Smt. Prakashwati (1995) 124 CTR (All) 83 : (1994) 210 ITR 567 (All), wherein the Allahabad High Court recorded the following concluding remarks : “There is another aspect of the matter. We have seen earlier that in these two cases the tax effect involved is very nominal, that is, Rs. 80 for the asst. yr. 1984-85 and Rs. 475 for the asst. yr. 1985-86. In CWT vs. Executors of Late Shri D.T. Udeshi (1992) 101 CTR (Bom) 290 : (1991) 189 ITR 319 (Bom), a Division Bench of the Bombay High Court rejected an application for reference where the tax effect was less than Rs. 8,500 in a year saying that no reference application could be made in view of the policy decision of the CBDT not to file references in the cases where the tax effect was less than Rs. 30,000 per year, contained in its Circular F. No. 279/26 of 1983-ITJ, dt. 12th July, 1984, and Circular F. No. 319/11 of 1987-WT dt. 14th July, 1987. For that reason also, these two applications are liable to be rejected.”

Reference was also made to the decision rendered by the Delhi High Court in CIT vs. ITAT & Anr. (1998) 150 CTR (Del) 319 : (1998) 232 ITR 207 (Del), wherein on the same issue, the Delhi High Court held as under :

“It was also submitted that though the quantum of the revenue involved for the year in question, i.e., the asst. yr. 1985-86, is only Rs. 19,363, the appeal decided against the Revenue has a recurring effect on Revenue for the succeeding years and, therefore, the instructions would not apply. It was submitted by learned counsel for the Department, developing his argument further, that in the event of the question being answered in favour of the Revenue, the cumulative revenue effect for all the years upto the year for which returns have been filed by the assessee would exceed the monetary limit laid down in the CBDT instructions. Learned counsel for the assessee has disputed the factual correctness of this statement. The fact remains that the desirability of making a reference has not been examined by the Tribunal from the abovesaid angle. Negligible amount of revenue is one of the relevant considerations for refusing the reference. [see CIT vs. Imperial Surgical Co. (P) Ltd. (1992) 104 CTR (SC) 379 : (1991) 192 ITR 646 (SC) : (1992) 63 Taxman 508 (SC); CIT vs. Smt. Prakashwati (1995) 124 CTR (All) 83 : (1994) 210 ITR 567 (All); CWT vs. Girdhari Lal Saraf (1991) 91 CTR (Raj) 225 : (1991) 190 ITR 264 (Raj); and CWT vs. Executors of Late D. T. Udeshi (1992) 101 CTR (Bom) 290 : (1991) 189 ITR 319 (Bom)].

The CBDT instructions are binding on the Department. If the case at hand is covered by a policy laid down by the CBDT in that case no fault can be found with the order of the Tribunal refusing to state the case and there is no reason why the High Court should interfere with such discretion of the Tribunal as has been exercised consistently with the uniform policy laid down by the CBDT which binds all the subordinate authorities of the IT Department. The High Court would not ordinarily encourage breach of policy decisions and the Departmental instructions which have a public purpose behind them. Valuable time of High Courts and highly placed Tribunals is not to be wasted on petty matters. However, if the case be not covered by the said instructions or be covered by one of the exceptions carved out in the instructions themselves in that event the denial of reference would be failure to exercise a jurisdiction statutorily vested in the Tribunal. Inasmuch as the Tribunal has not examined the case from that point of view and adequate material is not available before us enabling formation of an opinion either way, we deem the present one to be an appropriate case, which should be sent back to the Tribunal for consideration afresh.”

Reference was also made to the decision of the Bombay High Court in CIT vs. Camco Colour Co. (2002) 173 CTR (Bom) 255 : (2002) 254 ITR 565 (Bom), which is as under : “The issue in the present case being one of some potential general significance in relation to the policy decision taken by the Board not to raise questions of law where the effect is less than the amount prescribed in the instructions issued by the CBDT with a view to reduce litigations before the High Courts and the Supreme Court, we propose to dispose of this appeal on this short contention canvassed by learned counsel for the respondent without examining the merits of the question of law sought to be raised in this appeal. Learned counsel for the respondent also relied upon the decision in Navnit Lal C. Javeri vs. K.K. Sen, AAC (1965) 56 ITR 198 (SC); Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC) and K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC) to contend that the circular issued by the CBDT is binding on all the officers and CITs and in terms of which he sought to examine the question of necessity of filing of the present appeal.

In appears that despite the above circular, the Revenue has chosen to file the present appeal knowing fully well that the corridors of the Courts are flooded with pending litigations. The presentation of this appeal is quite contrary to the instruction issued in the circular which is binding on the Revenue. In the above view of the matter, considering the instructions issued by the CBDT, we are satisfied that the Board has taken a policy decision not to file appeal in a type of case in hand and the same is binding on the Revenue (appellant herein). In the result, we dismiss this appeal on this count in limine with no order as to costs.”

Our attention was also invited to the decision rendered by the Bombay High Court in CIT vs. Zoeb Y. Topiwala (2005) 199 CTR (Bom) 656 : (2006) 284 ITR 379 (Bom), wherein the Bombay High Court dismissed the appeal preferred by the Revenue by imposing costs on the Revenue, as the Revenue had ignored the instructions issued by the CBDT, prescribing monetary limits for the purpose of regulating the filing of appeals. Reference was also made to the decision rendered by the Madras High Court in CIT vs. Associated Electrical Agencies (2007) 295 ITR 496 (Mad), wherein the Court held as under : “The factual issue is undisputed that the tax effect involved in this appeal is only few thousand rupees. The above referred judgment was rendered in a reference case and the question of law therein was referred for the decision of this Court. This Court rejected the contention of the respondent therein by saying that the Circular dt. 4th Nov., 1987, was not an unqualified embargo on the Revenue proceeding with the matter in appeal where the amount of tax in issue was Rs. 30,000 or less. Several exceptions were set out in that circular. If the assessee wanted the benefit of the circular, it should have put the Revenue on notice when the Revenue applied for having the question referred so that the Revenue could have gathered relevant material, if any, to show that the matter was within the expected category. Incidentally, one of us (K. Raviraja Pandian, J.) was also a party to the said judgment. The said judgment has not denied the benefit of the circular to the assessee, but only cautioned the assessee that if the assessee put on notice the Revenue, the Revenue would have gathered material and satisfied whether it is a fit case for filing the appeal with reference to the exception clause contained therein. Hence, the judgment cannot be regarded as one which decided the scope and binding nature of the circular and decided in favour of the Revenue.

In the case of CIT vs. Rajasthan Patrika Ltd. (2002) 178 CTR (Raj) 414 : (2002) 258 ITR 300 (Raj), the Rajasthan High Court categorised the circular as one of administrative instructions and held that the administrative instruction cannot prevail over the statutory provision.

In the case of Rani Paliwal vs. CIT (2003) 185 CTR (P&H) 333 : (2004) 268 ITR 220 (P&H), the Punjab & Haryana High Court has held that from the perusal of the order of the Tribunal, it was clear that no plea was raised before the Tribunal that appeal was not entertainable because the tax effect was less than Rs. 1 lakh in each of the assessment years and therefore the High Court did not allow the assessee to raise the plea for the first time before the High Court and further held that the circular was not binding on the Tribunal and further held that such a plea was not a question of law.

The circular referred to in the abovesaid judgment has been subsequently revised in Circular No. F/279. It is not in dispute in this case that the tax effect is only a few thousand rupees and not exceeded the monetary limit of Rs. 2 lakhs prescribed in the abovesaid circular for filing appeal before the High Court. The exceptions stated in the circular for contesting the case irrespective of the revenue effect were : (i) Where Revenue audit objection in the case has been accepted by the Department, (ii) Where the Board’s order, notification, instruction or circular is the subject-matter of an adverse order, (iii) Where prosecution proceedings are contemplated against the assessee, (iv) Where the constitutional validity of the provisions of the Act is under challenge. and the monetary limit would not apply to writ matters. The circular would come into effect from 1st April, 2000.

We are of the considered view that none of the exceptions stated in the circular is applicable to the facts of the present case. The circular was stated to be issued by invoking the statutory power under s. 119 of the IT Act. The appeal is filed under s. 260A of the IT Act. It is well-settled principle of law that each and every provision of a statute has to be given the same importance. One provision cannot be elevated to a higher pedestal than the other provision, of course, unless or otherwise specifically stated either in the scheme, the Act or in the provision itself that a particular provision is subjected to or qualified by any other provision or the provision can be given effect to notwithstanding anything contained in any other provisions by assigning overriding effect. Hence, the contention that notwithstanding the circular, which was issued under s. 119 of the IT Act, the appeal could be filed by the Revenue under s. 260A has to be rejected for the reason that if the contention is accepted, one of the sections would become virtually otiose and that cannot be the intention of the law makers. Hence, the above judgments cannot be taken in aid for non-suiting the respondent/assessee from taking shelter under the Government order.

In this case, not only the tax effect involved is nearly Rs. 5,000, but also the other qualification prescribed in the circular were also not available or in existence to carve out the case to bring outside the purview of the circular. Even de hors the circular, if the facts are considered, the assessee is entitled to claim the benefit for the next assessment year if the same was negatived for the assessment year in question. Further, the point in issue is whether the bonus as claimed by the respondent has been paid within 31st Oct., 1991, or subsequent to that date, can by no stretch of imagination be considered as a question of law, rather than substantial question of law as provided under s. 260A of the IT Act.”

Reliance was then placed on a decision rendered by the Madras High Court in CIT vs. M. Pachamuthu (2008) 214 CTR (Mad) 524 : (2007) 295 ITR 502 (Mad), wherein it was held as under : “It is not argued by counsel for the Revenue that the circular issued is not binding on the Revenue. However, he relied on the decision reported in CIT vs. Abhishek Industries Ltd. (2006) 205 CTR (P&H) 304 : (2006) 286 ITR 1 (P&H). The issue involved in these appeals has been considered by us in the order made in Tax Case (Appeal) No. 222 of 2004 [CIT vs. Associated Electrical Agencies (2007) 295 ITR 496 (Mad)] dt. 16th Aug., 2007, and held against the Revenue in the sense that if the tax effect is less than as provided in the CBDT circular in F. No. 279/126/1998-ITJ and if the case has not come within the exceptions made in the circular, the appeals filed by the Revenue in the light of the circular cannot be legally maintainable.” Although, learned counsel for the respondent also placed reliance on the decision rendered by this Court in CIT of vs. Haryana Telecom Ltd. (IT Appeal No. 517 of 2007, decided on 16th Sept., 2008) yet we do not desire to make a reference to the same, as the aforesaid appeal was disposed of without recording any reasons, and as such, cannot be referred to as a precedent, on the subject under consideration.

As already noticed hereinabove, in none of the judgments relied upon by the learned counsel for the rival parties, reference was made to s. 268A of the 1961 Act. Judicial leaning despite non-reference to s. 268A of the 1961 Act, is seen to be tilting in favour of giving effect to the instructions issued by the CBDT wherein monetary limits were prescribed, by restraining the Revenue from filing appeals, except when the tax effect would be higher than the prescribed limits. At the juncture under reference i.e. prior to the introduction of s. 268A in the 1961 Act, the object of issuing such instruction was apparent and obvious, namely, alleviating unnecessary hardship to assessees. Possibly even to avoid unnecessary financial hardship and long drawn appellate proceedings even for the Revenue, where likely gains were negligible. There can be no doubt, that the process of litigation is a financial hardship. An individual assessee may have to suffer the hardship far beyond the effect thereof on the Revenue. The Revenue also incurs financial expense, which when taken to its logical effect, falls on the shoulders of the general public as the same is incurred out of money collected from innocent taxpayers. Filing of an appeal should be a fruitful exercise. An appeal should not be filed only to press a proposition of law, unless it results in an adverse inference against the Revenue. The veracity of filing an appeal must be gauged with reference to the tax, which is likely to be recovered by the Revenue, on the success thereof. If the proportion of the aforesaid recovery of tax as against the expenses incurred in pursuing the appellate remedy is negligible, and there is no other adverse effect, the inference should be, that the remedy of appeal would be an exercise in futility. In such an eventuality, an appeal should not be filed. Independently of the issue in hand, it would be pertinent to notice, that in terms of the law laid down by High Courts, as well as, the Supreme Court, it was imperative for the Revenue to avail of the appellate remedy, lest it be considered that the Revenue had conceded an important question of law, in favour of a particular assessee. The Revenue could not take the risk of suffering a recurring loss of tax recovery, even though, the tax effect was negligible. In this behalf, reference may be made to the decisions rendered by the Supreme Court in CIT vs. J.K. Charitable Trust (1992) 196 ITR 31 (All), Berger Paints India Ltd. vs. CIT (2004) 187 CTR (SC) 193 : (2004) 266 ITR 99 (SC) and C.K. Gangadharan & Anr. vs. CIT (2008) 218 CTR (SC) 1 : (2008) 304 ITR 61 (SC). In all these judgments, the apex Court concluded, inter alia, that in case.

[Citation : 324 ITR 115]

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