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K.R. Srivats

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New Delhi, May 24 The Central Board of Direct Taxes (CBDT) has come up with new instructions for the tax department on the issue of filing of its appeals before the Income Tax Appellate Tribunals (ITAT), High Courts and Supreme Court, providing greater clarity on the matter.

The latest instructions spell out elaborately the monetary limits and the conditions under which the department could prefer appeals before the Appellate Tribunals, High Courts and Supreme Court.

Although the monetary limits were spelt out in CBDT’s earlier instructions in 2005 and 2007, tax experts said that clarity was missing on issues like treatment of penalty orders.

“The latest instructions seek to lay down parameters that need to be followed by the department’s officers in deciding the matter that should be appealed before the tribunal and higher authorities,” said Mr Aseem Chawla, Tax Partner, Amarchand & Mangaldas. The department can file appeals in those cases where the “tax effect” exceeds the monetary limit prescribed under the latest instructions.

While the monetary limit for appeal before appellate tribunal has been pegged at Rs 2 lakh, the limit for appeal under Section 260A before the High Court is Rs 4 lakh and before the Supreme Court is Rs 10 lakh.

The CBDT has altered the meaning of “tax effect” in the latest instructions. Earlier, “tax effect” denoted taxes (excluding interest).

Now, “tax effect” has been given an elaborate meaning different from the earlier one.

In loss cases, the CBDT instructions say that the notional tax effect should be taken into account. In the cases of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.

More Stories on : Courts/Legal Issues | Income Tax

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