1. This appeal is preferred by the revenue challenging the order passed by the Tribunal deleting the disallowance made under Section 40A(3) of the Income Tax Act, 1961 and accordingly allowing the appeal of the assessee.

2. The total tax effect which is the subject matter of this appeal is Rs. 4,87,730/-. At the time of hearing, the learned Counsel for the assessee raised a preliminary objection stating that in view of instruction No. 3/2011 issued on 09.02.2011, the revenue is precluded from filing the appeals where the tax effect does not exceed Rs, 10 lakhs before the High Court. Therefore, it was contended that as the subject matter of the appeal i.e., the tax effect is Rs. 4,87,730/-which is less than Rs. 10 lakhs, this appeal filed under Section 260A of the Income Tax Act, 1961 is not maintainable and it is liable to be dismissed on that short ground. In view of the aforesaid preliminary objection, the same is considered as a preliminary point.

3. The learned Senior Counsel Sri. Indra Kumar appearing for the Revenue contended that instruction No. 3/2011 expressly states at clause (11) that the instructions will apply to appeals filed on or after 09.02.2011. However, the cases where appeals have been filed before 09.02.2011 will be governed by the instructions on this subject, operative at the time when such appeal was filed. The instruction which was operating on the day the present appeal is filed, was instruction No. 2/2005 which prescribed a monetary limit of Rs. 4 lakhs. Therefore, as the tax effect is Rs. 4,87,730/-, as it was above the monetary limit prescribed under instruction No. 2/2005, the appeal filed under Section 260A of the Act is maintainable and instruction No.3/2011 is not applicable to the present case.

4. Per contra Sri. A. Shankar, learned Counsel appearing for the assessee submitted that instruction No. 3/2011 was issued on 09.02.2011 and clause (11) of the said circular makes it only prospective. It is settled law that circular which is beneficial to an assessee is to be applied retrospectively and only if the instruction or circular issued as oppressive to the assessee, it has to be construed prospectively as held by the Apex Court and therefore, notwithstanding clause (11) of the instruction No.3/2011, the benefit conferred to the assessee under the said instruction has to be extended retrospectively to all pending cases before the date of issue of the said circular and therefore, he submits as the tax-effect is less than Rs. 10 lakhs, this appeal is liable to be dismissed on that short ground.

5. In the light of the aforesaid contentions, the point that arise for our consideration is,-

.“Whether instruction No. 3/2011 dated 09.02.2011 is prospective only or whether it applies to pending appeals before the High Court on the day of the instructions was issued?”

6. This concept of prescribing the monetary limit for preferring an appeal by the Revenue is not new. It is invoked from 1992. The instruction No. 1777 dated 04.11.1987 prescribed a monetary limit of Rs. 25,000/-for departmental appeals in Income Tax matters before the Appellate Tribunal, Rs. 50,000/-for filing reference, to the High Court and Rs. 1,50,000/-for filing appeals to the Supreme Court. Subsequently, the said Circular was superseded by the Board instruction No. 1903 dated 28.10.1992. Subsequently, in supersession of the above instruction, instruction No. 1979 dated 27.03.2000 came to be issued revising the monetary limits prescribing Rs. 1 lakh as the limit before the Appellate Tribunal, Rs. 2 lakhs before the High Court and Rs. 5 lakhs before the Supreme Court. The said circular was issued on 27.03.2000. On 27.05.2004 one more circular was issued clarifying certain aspects of circular No. 1979. Thereafter in partial modification of the above instructions, instruction No. 2/2005 was issued on 24.10.2005 revising the monetary limit for prescribing appeals before the Tribunal to Rs. 2 lakhs, to the High Court under Section