New Delhi, November 30, 2017

The Supreme Court in a judgment last week clarified that the circular issued by Central Board of Direct Taxes (CBDT), which mandates that no appeal with tax implication of less than Rs 10 lakh should be filed in high courts, must be applied retrospectively.

The tax department had contended that the circular was to be applied prospectively. The court order will benefit a large number of taxpayers besides reducing the pendency of disputes/litigation. “This Supreme Court decision provides a much awaited and welcome clarification that the revised monetary limits prescribed in CBDT circular dated February 09, 2011 be applied retrospectively, i.e. on all pending appeals as on date of issuance of this circular,” an expert at Nangia & Co said.

The circular was issued by CBDT in February, 2009 but it had a clear prospective implication. The circular had said that cases which were pending in the High Courts and had been filed prior to the issuance of circular but had tax effect of less than `10 lakh were required to be determined on their merits and not be dismissed by applying the circular. The apex court said that the circular should have a be applied retrospectively and cited the principle that a beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. Thus, when the circular is against the assessee, they have the right to claim the enforcement of the same prospectively.

[The Financial Express]