Circular No.5/2019

What this is

Circular No.5/2019 was issued by the Central Board of Direct Taxes on 5 February 2019. Its subject is Monetary limits for filing/withdrawal of Wealth Tax appeals by the Department before ITAT, HCs and SLPs/appeals before SC through extending the scope of Circular 3 of 2018 -Measures for reducing litigation.

This fixes the monetary limits below which the department will not appeal. It binds the department only: it is not a rule about the merits, and an assessee cannot draw an inference from a withdrawn appeal.

What it does

Carries the departmental appeal thresholds across to wealth tax. The monetary limits in para 3 of Circular No. 3 of 2018 dated 11 July 2018, which govern the filing of income-tax appeals before the Appellate Tribunal and the High Courts and special leave petitions and appeals before the Supreme Court, are extended mutatis mutandis to wealth tax appeals, with two changes. Para 4 is rewritten so that 'tax effect' means the difference between the tax on the net wealth assessed and the tax that would have been chargeable had the net wealth been reduced by the wealth relating to the issues under appeal, excluding interest unless chargeability of interest is itself the dispute, and in penalty orders meaning the quantum of penalty deleted or reduced. Para 11 is rewritten to say the limits do not apply to writ matters. The extension operates from the date of issue.

Why it was issued

Para 11 of Circular No. 3 of 2018 had kept direct tax matters other than income-tax outside the limits, and since there is no charge under the Wealth-tax Act, 1957 with effect from 1 April 2016, the Board decided as a litigation-management step to bring wealth tax appeals in.

Who it reaches

• Assessees with pending wealth tax appeals filed by the Department
• Assessees facing a departmental appeal or special leave petition on a wealth tax penalty
• Counsel seeking withdrawal of low-tax-effect wealth tax appeals

The instrument, as the Board published it

F. No. 279/Misc/M-84/2018-ITJ Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes Judicial Section Circular No.5/2019 New Delhi, 5th February 2019 Subject:- Monetary limits for filing/withdrawal of Wealth Tax appeals by the Department before ITAT, HCs and SLPs/appeals before SC through extending the scope of Circular 3 of 2018 -Measures for reducing litigation. Reference is invited to Board's Circular No. 3 of 2018 dated 11.07.2018 (hereinafter, referred to as "the Circular") vide which monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/ appeals before Supreme Court were specified. Para 11 of the Circular states that the monetary limits specified in para 3 shall not apply to writ matters and Direct tax matters other than Income tax and filing of appeals in such cases shall continue to be governed by relevant provisions of statute and rules. 2. There is no charge under Wealth Tax Act, 1957 w.e.f 1 st April, 2016. Therefore, as a step towards litigation management, it has been decided by the Board that monetary limits for filing of appeals in Income tax cases as prescribed in Para 3 of the Circular shall also apply to Wealth Tax appeals through extension of the Circular to Wealth tax matters in a mutatis mutandis manner and with modifications as prescribed hereunder. 3. For the purpose of Wealth Tax appeals: A. Para 4 of the Circular shall be read as follows : "For this purpose, 'tax effect' means the difference between the tax on Net Wealth assessed and the tax that would have been chargeable had such Net Wealth been reduced by the amount of wealth in respect of the issues against which appeals is intended to be filed. 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 case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against." B. Para 11 of the circular shall read as follows. "The monetary limits specified in para 3 above shall not apply to writ matters. " 4. The said extension of the Circular to wealth tax appeals shall come into effect from the date of issue of this Circular. 5. The same may be brought to the notice of all concerned. 6. Hindi version will follow. DCIT(OSD)-ITJ, CBDT Copy to: 1. The Chairman, Members and all other officers in CBDT of the rank of Under Secretary and above. 2. All PCCsIT jDGsIT for bringing to the notice of all officers. 3. ADG (PR, PP& OL), Mayur Bhawan, New Delhi for printing in the quarterly Tax Bulletin and for circulation as per usual mailing list. 4. The Comptroller and Auditor General of India. 5. ADG (Vigilance), Mayur Bhawan, New Delhi. 6. The Joint Secretary & Legal Advisor, Ministry of Law & Justice, New Delhi. 7. All Directorates ofIncome-tax, New Delhi and DGIT (NADT), Nagpur. 8. !TCC (3 copies). 9. The ADG (System)-4, for uploading on the Department's website. 10. Data Base Cell for uploading on irsofficersonline.gov.in. 11. njrs_support@nsdl.co.in for uploading on NJRS. 12. Hindi Cell for translation. 13. Guard file. DCIT(OSD)-ITJ, CBDT

What to watch

• The tax effect for wealth tax is computed on net wealth, not on income — the substituted para 4 is the measure, and it excludes interest unless the interest charge is itself in dispute.
• Writ matters stay outside the limits altogether.
• The extension runs from the date of issue of this circular, so it governs filing and withdrawal from that date.
• Everything else in Circular No. 3 of 2018, including the exceptions where an appeal is filed regardless of tax effect, applies mutatis mutandis and must be read with this.

Where you meet it

On an application to have a departmental wealth tax appeal before the Tribunal or High Court dismissed or withdrawn as below the monetary limit.

What it names

It mentions. Circular No. 3/2018, Circular No. 5/2019

← F.No. 275/192/2018-IT (B)  ·  F.No. 275/192/2018-IT (B) →