The Tax Publishers2021 TaxPub(DT) 0928 (Karn-HC)

INCOME TAX ACT, 1961

Section 254

Where AO had made disallowances with regard to the provisions of wage reversion to the extent as well as provision for audit fees and notional tax effect on aforesaid contested issue was more than Rs. 10 Lakhs and thus, appeal before the tribunal was maintainable and the same ought to have been adjudicated on merits, therefore, order of the tribunal was quashed and matter was remanded back to Tribunal for decision afresh in accordance with law.

Appeal (Tribunal) - Maintainability of appeal before Tribunal - ITAT dismissed appeal on ground of low tax effect being less than Rs. 10 lakhs -

AO made disallowances relating to provision of gold theft, wage reversion and audit fees by holding that same are contingent in nature and cannot be allowed as genuine expenditure. Disallowances were made by AO on the expenditure incurred by the assessee on the advertisement, bonus as well as rent. CIT(A) partly allowed the appeal. Tribunal by an Order dismissed the appeal without adjudicating the same on merits on the ground that the tax effect in the appeal is less than Rs. 10 Lakhs and relied on Circular No. 21/2015. Held: From perusal of Circular No.21/2015, it was evident that where the returned loss is reduced or assessed as income, tax effect would include notional tax on disputed additions and AO had made disallowances with regard to the provisions of wage reversion to extent as well as provision for audit fees and notional tax effect on aforesaid contested issue was more than Rs. 10 lakhs and therefore, the appeal before the Tribunal was maintainable and the same ought to have been adjudicated on merits. Therefore, order of the Tribunal was quashed and matter was remanded back to Tribunal for decision afresh in accordance with law.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2009-10



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