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October 2011

Appeals by Revenue: Small tax effect: CBDT circular dated 15-5-2008 providing that notional tax effect could be taken in loss cases is prospective: Applicable to appeals filed on or after 15-5-2008.

By K. B. Bhujle | Advocate
Reading Time 1 mins
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[CIT v. Continental Construction Ltd., 336 ITR 394 (Del.)]

The CBDT Circular dated 15-5-2008, provided that the Circular is applicable to the appeals filed on or after 15-5-2008. The Circular also clarified the terms ‘tax effect’ to include the notional tax effect in loss cases. It is the case of the Department that the Circular is clarificatory and therefore, in loss cases the notional tax effect has to be considered even in respect of appeals filed prior to 15-5-2008.

The Delhi High Court held that the notional tax effect in loss cases does not apply to appeals filed prior to 15-5-2008.

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