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No appeals by ITD for tax loss upto 4 lacs for ITAT, 10 lacs for High Court and 25 lacs for Supreme Court and as per merits of case


All Chief Commissioners of Income-tax and
All Directors General of Income-tax

Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and Supreme Court - measures for reducing litigation - Reg -

I am directed to enclose herewith CBDT's Instruction No 5/2014 dated 10.07.2014 on the above mentioned subject.

2. This Instruction is issued u/s 268 A (1) of the Act and should be brought to the notice of all officers, DRs, Standing counsels and other counsels representing Department before ITAT or courts of law within the region for strict compliance with immediate effect.

3. Several instances have been brought to Board's notice wherein Department has had to face criticism/flak/stricture for filing appeal without due application of mind. I am,therefore, directed to draw your attention to Para 3 of the Instruction and re-iterate that the monetary limits so prescribed are merely guiding factor in deciding whether appeal should be filed or not. They should not be considered as the only factor in arriving at such decisions. Filing of appeal has to be decided strictly on merits.

(Priyank Singh)


All Chief Commissioners of Income-tax and
All Directors General of Income-tax

Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and Supreme Court - measures for reducing litigation - Reg -


Reference is invited to Board's instruction No 3/2011 dated 09/02/2011
wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified.

2. In supersession of the above instruction, it has been decided by the Board
that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below.

3. Henceforth appeals shall not be filed in cases where the tax effect does not
exceed the monetary limits given hereunder: -

S No Appeals in Income-tax matters Monetary Limit (in Rs)
1. Before Appellate Tribunal 4,00,000/-
2. U/s 260 A before High Court 10,00,000/-
3. Before Supreme Court 25,00,000/-

It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.

4. For this purpose, "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 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.

5. The Assessing Officer shall calculate the tax effect separately for every
assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in
case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order / judgement involves more than one assessee, each assessee shall be dealt with separately.

6. In a case where appeal before a Tribunal or a Court is not filed only on
account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction". Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing
an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.

7. In the past, a number of instances have come to the notice of the Board,
whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any other assessment year or in the case of any other assessee for the same or any other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any
precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the judicial folders in the office of CsIT must be maintained in a systemic manner for easy retrieval.

8. Adverse judgments relating to the following issues should be contested on
merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect.

(a) Where the Constitutional validity of the provisions of an Act or Rule are
under challenge, or
(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) Where Revenue Audit objection in the case has been accepted by the

9. The proposal for filing Special Leave Petition under Article 136 of the
Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.

10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file -appeal in such cases may be taken on merits of a particular case.

11. This instruction will apply to appeals filed on or after 10th July, 2014
However, the cases where appeals have been filed before 10th July, 2014 will be governed by the instructions on this subject, operative at the time when such appeal was filed.

12. This issues under Section 268A (1) of the Income-tax Act 1961.

Highlights of Finance Bill(02), 2014 Indirect Taxes

Highlights of Finance Bill(02), 2014
  1. Change applicable with immediate effect i.e. from 11th July, 2014 onwards
Amendments related to Mega Exemption Notification
  • Service Tax made applicable on Air-conditioned Contract Carriages (benefit of abatement is allowed and service tax is payable on 40% of the value of service);
  • Service Tax made applicable on Clinical Research Organization;
  • Service Tax made applicable on other services such as consultancy, designing, etc. in relation to any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation to Government, a local authority or a governmental authority;
  • Exemption on services of treatment or disposal of bio-medical waste to a clinical establishment;
  • Exemption on Services received by educational institutions made more clarificatory by introducing exhaustive list which is as follows:
  • transportation of students, faculty and staff of educational institution,
  • Catering services including any mid-day meal scheme sponsored by government,
  • Security or cleaning or house-keeping services in such educational institution,
  • Services relating to admission to such institution or conduct of examination.
  • Exemption on Services provided by an educational institution to its students, faculty and staff for eg. Transportation facility, Air conditioned Canteen, Health Services etc. provided to students, faculty and staff;
  • No Service Tax on Dharamshala, ashrams etc.
  • No Service Tax on Indian tour operators in cases where they organize tours for a foreign tourist wholly outside India;
  • Services by way of loading, unloading, packing, storage or warehousing, transport by vessel, rail or road (GTA), of organic manure, cotton, ginned or baled, made exempted;
  • Services by way of transport by vessel, rail of organic manure made exempted.
Amendments related to Reverse Charge Mechanism:
  • Services provided by Directors to Body corporates brought under reverse charge
    • Services provided by recovery agents to Banks, Financial Institution and NBFC brought under reverse charge
    • If Rent a cab Service provider does not claim the benefit of abatement scheme, service provider and service receiver both shall pay 50% of service tax each;
    • In relation to GTA Service the condition for availing abatement in case of GTA service is being amended to clarify that the condition for non- availment of credit is required to be satisfied by the service providers only. Service recipient will not be required to establish satisfaction of this condition by the service provider.                                 
Amendments related to SEZ
  • Service provided by sub-contractor to contractor who is further providing services (except Works Contract Service) to SEZ unit or the developer, benefit of exemption shall not be allowed to the sub-contractor;
  • Now service tax shall not be charged by the service provider if the services are provided to SEZ unit or developer on the basis of form A-1 but if form A-2 is not received within 3 months, service tax shall be paid by service provider;
  • Provisions with regard to claiming of exemption for SEZ units/ developers made     more simplified by imposing time limits for issuance of Form A-2 etc;
  • There would be no requirement of furnishing service tax registration number of service provider in case of full reverse charge
Availability of CENVAT Credit:
  • In case of service tax paid under full reverse charge, the condition of payment of invoice value to the service provider for availing credit of input services is being withdrawn. However, there is no change in respect of partial reverse charge.
  • Re-credit of CENVAT credit reversed on account of non-receipt of export proceeds within the specified period or extended period, to be allowed, if export proceeds are received within one year from the period so specified or extended period. This can be done on the basis of documents evidencing receipt of export proceeds (Refer the newly inserted proviso to rule 6(8)).
  1. Changes applicable from 1st September, 2014
  • Manufacturer or a service provider shall take credit on inputs and input services within a period of six months from the date of issue of invoice, bill or challan. Currently, CENVAT Credit can be claimed at any time after receipt of invoice.
  1. Changes applicable from 1st October, 2014
  • Hike in interest rates from 18% to 24% & 30% in case of delay in payment beyond six months and one year respectively;
  • E- payment of service  tax made mandatory for every assessee;
  • Changes in Place of Provision of Services Rules, 2012 such as conditions for determination of place of provision of repair service carried out on temporarily imported goods is being omitted;
  • The definition of intermediary is being amended to include the intermediary of goods in its scope under Place of Provision of service rules;
  • Point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier, if the invoice has been issued on or after 1st October, 2014;
  • Taxable portion in respect of transport of goods by vessel is being reduced from 50% to 40%;
  • Rule 2A of the Service Tax (Determination of Value) Rules, 2006, category “B‟ and “C‟ of works contracts are proposed to be merged into one single category, with percentage of service portion as 70%;
  • Now, CENVAT credit of input service of renting of motorcab is allowed to a Rent a Cab Service provider taking the benefit of abatement scheme of the following amount:
  • Full CENVAT credit of such input service received from a person who is paying service tax on forty percent of the value; or
  • Up to forty percent CENVAT credit of such input service received from a person who is paying service tax on full value.
  • Now, CENVAT credit of input service of a tour operator is allowed to a Tour operator service provider taking the benefit of abatement scheme.
  • Service consisting of hiring of Vessels (excluding yachts) and Aircraft is being excluded from rule 9(d). Accordingly, hiring of vessels, or aircraft, irrespective of whether short term or long term, will be covered by the general rule, that is, the place of location of the service receiver. Hiring of yachts would however continue to be covered by rule 9 (d).
  1. Changes applicable by way of notification after Finance bill gets assent from the president
  • Scope of taxability on sale of space for advertisement in broadcast media, namely radio or television is proposed to be extended to cover such sales on other segments like online and mobile advertising, advertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc.
  • Service tax is proposed to be levied on services provided by radio taxis or radio cabs, whether or not air-conditioned. The abatement presently available to rent-a-cab service would also be made available to radio taxi service, to bring them on par.
  1. Changes applicable from the date of  bill gets assent from president
  • Section 73 is being amended by way of insertion of new sub-section (4A) to prescribe time limit of six months and one year respectively for completion of adjudication for notice issued under sub-section (1) of section 73 and proviso to sub-section (1) and proviso to sub-section (4A).



   1)      Fiscal Deficit targeted at 4.1% for 2014-15 and to bring it to 3% by 2016-17.  
   2)      GST to be introduced by the year end.
   3)      No retrospective amendments by this Government.
   4)      A new committee under CBDT to study cases pending because of retrospective amendments.
   5)      FDI on Defense and Insurance raised to 49%.
   6)      To allow FDI upto 49% in select sectors.
   7)      E Visa to be allowed on 9 major Airports.
   8)      PSU Banks to need a Capital Infusion of Rs 2.48 Lakhs Crore by 2018.
   9)      Change in Dividend Distribution Tax Calculation applicable from 1st Oct 2014.
   10)  Various Plans And Budget Allocations

S No
Allocation For
Budget Allocation
100 New Cities
7060 Crore
Rural Road Developments (PMGSY)
14389 Crore
Rural Enterprenuership Programme
100 Crore
Rural Drinking Water Programme
3600 Crore
Improving Irrigation
1000 Crore
Rural Housing Scheme
8000 Crore
Metro Projects For Ahmedabad & Lucknow
100 Crore
Affordable Housing VIA NHB
4000 Crore
National Housing Board
12000 Crore
Muncipal Debt Management
50000 Crore
Sarva Shiksha Abhiyan
28635 Crore
Setting of IIT and IIM
500 Crore
Low Cost Housing for Young Citizens
4000 Crore
Agri Infra Funds
100 Crore
National Industrial Corridor
100 Crore
Young entrepreneurs
10000 Crore
Farm Warehousing plan
500 Crore
Long Term Rural Credit fund
50000 Crore
6 Textile Clusters
200 Crore
Agri University In Haryana
200 Crore
Harbour Projects
11635 Crore
National Industrial Corridor in Pune
100 Crore
Farm Price Stabilization
500 Crore
Investment In NHAI & State Roads
37850 Crore
Preparatory Work On Clean Thermal Energy
100 Crore
Defence Sector
229000 Crore
State Police Modernization
300 Crore
Socio Economic Development Of Villages
990 Crore
5 Tourist Circuits
500 Crore
Boosting Rail Connectivity In Border Area
1000 Crore


1)      New Slab Rates

Upto Rs.2,50,000                                             Nil.
Rs. 2,50,001 to Rs. 5,00,000                           10 per cent.
Rs. 5,00,001 to Rs. 10,00,000                         20 per cent.
Above Rs. 10,00,000                                       30 per cent.

Upto Rs.3,00,000                                             Nil.
Rs. 3,00,001 to Rs. 5,00,000                           10 per cent.
Rs. 5,00,001 to Rs.10,00,000                          20 per cent.
Above Rs. 10,00,000                                       30 per cent.

Upto Rs. 5,00,000                                            Nil.
Rs. 5,00,001 to Rs. 10,00,000                         20 per cent.
Above Rs. 10,00,000                                       30 per cent.

If Total Income crosses One Crore then the above rates would be enhanced by 10% Surcharge.

2)      80C Limit Enhanced to Rs 150000 from Rs 100000.
3)      Deduction from House property Enhanced from Rs 150000 to Rs 200000.

4)      Amendment in Section 32AC of Income Tax Act, Limit reduced from 100 Crore to Rs 25 Crore.
Section 32AC states that 15% Investment Allowance would be allowed in case company Invest Rs 25 Crore or more in Plant and Machinery.
15% is over and above the Depreciation.

5)      10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.
6)      2 New Business Added for Deduction Under Section 35AD
a.      Slurry Pipeline for transportation of Iron Ore.
b.      Setting Up and Operating a Semi conductor wafer fabrication Manufacturing Unit.
7)      Use period of 8 years now specified under section 35AD.

8)      Period of holding for short term capital gain has been increased to 36 Months for shares.

9)      Foreign Dividend received by Indian companies now will get low tax benefit of 15% without limiting it to particular Assessment Year.

10)  Section 92CC of the Act relates to Advance Pricing Agreement (APA). However, these agreement were valid for future transactions and transaction entered earlier usually enter into Litigations. In order to streamline this, APA may be sought for 4 previous years.

11)  Security held by FII which has invested such In such security in accordance with regulations made under SEBI Act,1962 would be treated at Capital Asset and any income arising from that would be capital Gain.

12)  Entities other than companies claiming deduction under Section 35AD, now under the preview of Alternate Minimum Tax taxable @ 18.5%. However benefit of depreciation would be allowed.

Total income :                                                                                     Rs. 60
Deduction claimed under Chapter VI-A :                                           Rs. 40
Deduction claimed under section 35AD on a capital asset :              Rs. 100

Computation of adjusted total income for the purposes of AMT

Total income :                                                                                     Rs. 60
(i) deduction under Chapter VI-A (on non-specified business) :         Rs. 40
(ii) deduction under section 35AD (on specified business)    Rs. 100
Less: depreciation under section 32                                       Rs. 15  Rs. 85
Adjusted total income under section 115JC :                                     Rs. 185

13)  Any advance forfeited against any capital asset would now be taxable under income from other Sources. Also, advance forfeited earlier was reduced from cost of asset and now it won’t be reduced to remove double taxation.

14)  Any sum received from Life Insurance companies which is not exempt under section 10(10D) of the Act, including sum received as bonus would now be subject to TDS @2% . However if amount received is less than 1 Lac no TDS is to be deducted.

15)  Transfer pricing officer now powered to levy penalty Under Section 271G of the Act. Earlier only AO has the power to levy penalty.
16)  Expenditure incurred under CSR would not be allowed as deduction under section 37 of Income tax Act.
17)  In case of Non deduction of TDS or nonpayment of tax, the disallowance would be restricted to 30% of the amount of expenditure.
18)  Applicability of section 40(a)(ia) {i.e. disallowance of expenditure in case TDS is not deducted or not paid} on payments made under chapter XVII-B {I.e Salary, director remuneration etc.}
19)  Presumptive tax in case of plying, hiring or Leasing of goods carriages in case assessee does not hold 10 good carriages at any time during the year.
Presumptive tax increased to Rs 7500 per vehicle per month.

20)  Any transfer of government security carrying a periodic payment of interest from one non resident to another non resident would not be considered as transfer under section 47 of Income Tax Act.
21)  Amendment under section 54 : Deduction is only available if new resident house is located in India
22)  Amendment under section 54F : Deduction is available for only 1 residential house located in India.
23)  The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.
24)  Mutual fund company, venture capital company and venture capital fund and securitization fund are now required to furnish a return of income under section 139(4C) of income tax act.
25)  Deduction under Section 80CCD now allowed to Private sector employees too.

Section 80CCD relates to contribution to pension funds subject to a maximum of 10% of salary.

This Article has been shared by CA Gaurav Mittal. He can be reached at



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