Girish Chandra Gupta, J. - (1.) THE subject matter of challenge in this appeal is a judgment and order dated 14th May, 2013 by which the learned Tribunal allowed the appeal of the assessee. Aggrieved by the order of the learned Tribunal, the revenue has come up in appeal under section 260A of the Income Tax Act.
(2.) IT appears that an assessment under section 147/144 of the Income Tax Act was made by the Assessing Officer holding that the total taxable income escaped was Rs. 18,69,000/ -. The tax payable by the assessee was calculated at a sum of Rs. 6,87,615/ -. He added interest under section 234B of the said Act amounting to a sum of Rs. 6,25,982/ -. The assessee challenged the order of the Assessing Officer unsuccessfully before the CIT (Appeal) and ultimately the learned Tribunal was approached, which has allowed the appeal of the assessee and set aside the order passed both by the Commissioner of Income Tax and the Assessing Officer. Mr. Khaitan, learned senior Advocate appearing in support of the respondent -assessee contended that considering that the tax effect in this case is Rs. 6,87,615/ -, the department is not entitled to prefer an appeal following the Instruction No. 3 of 2011 dated 9th February, 2011 issued by the C.B.D.T. He relied upon Clauses 3 and 4 of the said Instruction. From Clause -3, it appears that the appeals are not to be filed before the High Court under section 260A of the Act when the tax effect is within Rs. 10,00,000/ -. The expression 'Tax Effect' has been defined in Clause -4 of the said Instruction, which reads as follows: 'Tax effect' means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as 'disputed issues'). However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where the returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.
(3.) MR . Khaitan contended that the amount of interest claimed under section 234B of the Income Tax Act of the Assessing Officer cannot be taken into account for the purpose of determining the tax effect in the light of Clauses -3 and 4 of the Instruction issued by C.B.D.T. The matter was heard by us on 9th April, 2014.;