THE COMMISSIONER OF INCOME TAX vs. M/S KURLON LTD

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ITA/26/2009HC KarnatakaKAHC01009431200914 August 2012Bench: B.MANOHAR,K.SREEDHAR RAO2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law are answered against the Revenue, in view of the decision of the Supreme Court in Civil Appeal No. 5293/2003 in the case of TRF Limited -vs- Commissioner of Income Tax, Ranchi. However, the Court directed that while passing the consequential order under Section 260 of the IT Act, the Assessing Officer (AO) shall comply with the observations of the Supreme Court in the cited case. This compliance involves ascertaining whether the bad debt written off in the assessee's books of accounts in the previous years is in terms of Section 36(2) of the IT Act. The appeal filed by the Revenue was dismissed.

What were the facts?

The Commissioner of Income Tax and the Assistant Commissioner of Income Tax (collectively referred to as the Revenue) filed an appeal under Section 260-A of the Income Tax Act, 1961, before the High Court of Karnataka. The appeal arose from an order dated August 29, 2008, passed by the Income Tax Appellate Tribunal (ITAT), Bangalore, in ITA No. 293/BNG/2008. The assessment year in question was 2003-04. The Revenue sought to set aside the ITAT's order, which had confirmed the orders of the Appellate Commissioner and the Assistant Commissioner of Income Tax.

What were the issues?

1. Whether the substantial questions of law formulated in the appeal are to be answered in favour of the Revenue. (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue sought to set aside the ITAT's order and confirm the orders of the lower authorities. The judgment does not explicitly detail the specific arguments made by the Revenue, but it implies they were seeking to overturn the ITAT's decision regarding bad debts. The Revenue relied on the Supreme Court's decision in Civil Appeal No. 5293/2003 in the case of TRF Limited -vs- Commissioner of Income Tax, Ranchi, to argue that the questions of law should be answered in their favour.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 260,Section 36(2)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 14TH DAY OF AUGUST 2012 PRESENT THE HON'BLE MR. JUSTICE K.SREEDHAR RAO AND THE HON'BLE MR. JUSTICE B.MANOHAR ITA No.26/2009 BETWEEN : 1 THE COMMISSIONER OF INCOME TAX C.R.BUILDING, QUEENS ROAD BANGALORE. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-11(3) C R BUILDING, QUEENS ROAD BANGALORE. ...APPELLANTS (By Sri K V ARAVIND, ADV.) AND : M/S KURLON LTD 3RD FLOOR, NORTH BLOCK MANIPAL CENTRE DICKENSON ROAD BANGALORE. ...RESPONDENT (By Dr.R B KRISHNA, ADV.) This ITA filed u/S.260-A of I.T.Act, 1961 arising out of Order dated 29-08-2008 passed in ITA No. 293/BNG/2008, for the Assessment Year 2003-04, praying that this Hon'ble Court may be pleased to:

2 i. formulate the substantial questions of law stated therein, ii. allow the appeal and set aside the order passed by the ITAT Bangalore in ITA No. 293/BNG/2008,dated 29-08-2008 confirm the orders of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income tax, Circle-11(3), Bangalore. This ITA coming on for hearing this day, K.SREEDHAR RAO, J, delivered the following: JUDGMENT In view of the decision of the Supreme Court in Civil Appeal No.5293/2003 in the case of TRF Limited -vs- Commissioner of Income Tax, Ranchi, the questions of law are answered against the revenue. However, while passing the consequential order under Section 260 of I.T Act, the AO shall comply with the observations of the Supreme Court in the cited case to find out whether the bad debt written in the books of accounts shown by the assessee in the previous years in terms of Section 36(2) of the IT Act. The appeal is dismissed. Sd/- JUDGE Sd/- JUDGE bkm.

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