Facts of the Case

The present appeal was filed by the Revenue before the Delhi High Court against the respondent/assessee, DKG Finance & Chit Fund Pvt. Ltd. During the proceedings, the respondent filed an application seeking dismissal of the appeal on the ground that the tax effect involved was below the monetary threshold prescribed by the Central Board of Direct Taxes (CBDT).

It was submitted that the tax component in the appeal amounted to Rs. 91,75,148/-, while the interest component aggregated to Rs. 1,90,38,430/-. The respondent further relied on CBDT Circulars to contend that interest is not to be included in computing the tax effect, unless the dispute specifically relates to interest.

Issues Involved

  1. Whether the appeal filed by the Revenue is maintainable when the tax effect is below the threshold limit of Rs. 1 crore prescribed under CBDT Circular No. 17/2019.
  2. Whether interest component should be included while calculating the tax effect for determining maintainability of appeal.

Petitioner’s (Revenue’s) Arguments

  • The Revenue initially pursued the appeal challenging the order of the lower authority.
  • However, upon consideration of the computation sheet, learned counsel for the Revenue fairly conceded that the tax effect in the present case was below the prescribed threshold limit.

 Respondent’s (Assessee’s) Arguments


  • The respondent argued that the tax effect was less than Rs. 1 crore, which is the minimum threshold for filing appeals as per CBDT Circular No. 17/2019 dated 08.08.2019.
  • It was further submitted that interest should not be included in computing tax effect, as clarified under CBDT Circular No. 3/2018 dated 11.07.2018.
  • The respondent also highlighted urgency, stating that dismissal of the appeal would enable it to avail benefits under the Vivad Se Vishwas (Amnesty Scheme).

Court’s Findings / Order

  • The tax effect in the present appeal was admittedly below Rs. 1,00,00,000/-.
  • As per CBDT Circular No. 17/2019, appeals below the prescribed monetary limit are not maintainable.

Accordingly, the Court dismissed the appeal as withdrawn in view of the low tax effect. 

Important Clarification

  • While computing tax effect, interest component is excluded, unless the dispute specifically pertains to interest.
  • CBDT Circulars prescribing monetary limits are binding on the Revenue authorities, and appeals filed contrary to such limits are liable to be dismissed.

 Sections  Involved

  • CBDT Circular No. 17/2019 dated 08.08.2019
  • CBDT Circular No. 3/2018 dated 11.07.2018
  • Provisions relating to tax effect and appellate jurisdiction under the Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:3968-DB/MMH24122020ITA7322017_161312.pdf

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