THE COMMISSIONER OF INCOME TAX vs. M/S PSI DATA SYSTEMS LTD

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ITA/1102/2008HC KarnatakaKAHC01047937200807 February 2014Bench: B.MANOHAR,DILIP B.BHOSALE5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that all the substantial questions of law raised in the present appeals were squarely covered by its own judgment in Commissioner of Income Tax & Another V/s. Samsung Electronics Co., Ltd. And others (2011)64 DTR Judgments178. The Court agreed with the Revenue's submission that the questions were recurring and should be answered in its favour based on the Samsung Electronics decision. The Court noted that the assessee's counsel did not dispute this submission. Consequently, the appeals were disposed of in terms of the Samsung Electronics judgment, meaning all questions were answered in favour of the Revenue and against the assessee. The Assessing Officer was directed to pass consequential orders under Section 260(1A) of the Income Tax Act, 1961, after the Supreme Court finally disposes of the SLP arising from the Samsung Electronics judgment. Until then, the Assessing Officer was to keep the matter pending for consequential orders. Liberty was reserved to the assessee to seek revival of the appeals if the Supreme Court remands the matter.

What were the facts?

The Commissioner of Income-tax and the Income Tax Officer (Appellants) filed these appeals against the orders of the Income Tax Appellate Tribunal (ITAT) in Bangalore. The appeals concerned assessment years not explicitly stated but related to M/s. PSI Data Systems Ltd. (Respondent-assessee). The Appellants sought to set aside the ITAT's orders and confirm the Assessing Officer's orders. The procedural history involves the ITAT's decisions in ITA Nos. 1125/BNG/2007, 1126/BNG/2005, 1127/BNG/2007, and 1128/BNG/2007, dated June 20, 2008. The High Court heard arguments from both sides regarding the substantial questions of law.

What were the issues?

1. Whether the substantial questions of law raised in these appeals are squarely covered by the judgment of this Court in Commissioner of Income Tax & Another V/s. Samsung Electronics Co., Ltd. And others (2011)64 DTR Judgments178? (Question of law) Assessee's arguments: - The appeals should be dismissed as the tax effect is less than Rs.10 lakhs, in view of Instruction No.3/2011 issued under Section 268A of the Income Tax Act, 1961. Revenue's arguments: - The substantial questions of law are squarely covered by the judgment of this Court in Commissioner of Income Tax & Another V/s. Samsung Electronics Co., Ltd. And others (2011)64 DTR Judgments178. - The questions are recurring in nature and deserve to be answered in favour of the Revenue in view of the Samsung Electronics judgment. - The Supreme Court has not passed any interim order in the SLP filed by Samsung Electronics, and in another SLP filed by M/s. IBM India Ltd. with similar questions, leave has been granted but 'No stay' has been ordered.

Which sections of the Income-tax Act were involved?

Section 260A,Section 268A,Section 260(1A)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 7th DAY OF FEBRUARY 2014

PRESENT

THE HON’BLE MR. JUSTICE DILIP B.BHOSALE AND THE HON’BLE MR. JUSTICE B.MANOHAR

I.T.A. No.1100/2008 C/W. I.T.A. NOS.1101/2008, 1102/2008 & 1103/2008

BETWEEN :

1.

The Commissioner of Income-tax, International Taxation, Rashtrothana Bhavan, Nrupathunga Road, Bangalore.

2.

The Income Tax Officer, International Taxation, Ward – 19(2), Rashtrothana Bhavan, Nrupathunga Road, Bangalore. …APPELLANTS (Common in all)

(By Sri.K.V.Aravind, Adv.)

AND:

M/s.PSI Data Systems Ltd., “Sunningdale”

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Embassy Gold Links, Business Park, Intermediate Ring Road, Bangalore – 560071.

….RESPONDENT (Common in all)

(By Sri.K.S.Ramabhadran, Adv.)

. . . .

These I.T.As. are filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeal and set-aside the order passed by the Income Tax Appellate Tribunal, Bangalore in I.T.A. Nos. 1125/BNG/2007, 1126/BNG/2005, 1127/BNG/2007 and 1128/BNG/2007 respectively dated 20.06.2008 confirm the orders of the Income Tax Officer, (Intl. Taxn.), Ward-19(2), Bangalore in the interest of justice and equity.

These I.T.As. coming on for hearing, this day, Dilip B.Bhosale, J., delivered the following:

JUDGMENT

Heard the learned counsel appearing for the parties.

2.

Mr.K.V.Aravind, learned counsel appearing for the appellant states that the substantial question of law raised in these appeals are squarely covered by the

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judgment of this Court in Commissioner of Income Tax & Another V/s. Samsung Electronics Co., Ltd. And others (2011)64 DTR Judgments178. He further submits that the judgment of this Court in Samsung Electronics (supra) is carried by the assessee therein to the Supreme Court and the SLP is now pending for admission.

3.

There is no dispute that the Supreme Court has not passed any interim order in the SLP. Our attention was invited to another SLP bearing (Civil) No.396/2012 filed by M/s. IBM India Ltd., wherein the questions raised are similar. The Supreme Court has already granted leave, but has specifically mentioned in the order “No stay”.

4.

Mr. K.S.Ramabhadran, learned counsel for the respondent-assessee submits that since tax effect of these three appeals is less than Rs.10 lakhs, the appeals deserve to be dismissed in view of Instruction

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No.3/2011 issued under Section 268A of the Income Tax Act, 1961.

5.

Having confronted with this, Mr.Aravind after taking us through the questions raised in these appeals submitted that the questions are recurring in nature and therefore they deserve to be answered in favour of the Revenue in view of the judgment of this Court in Samsung Electricals. We do find ourselves in agreement with Mr.Aravind. As a matter of fact, the learned counsel appearing for the assessee also has not disputed the submission made by Mr.Aravind.

6.

Since it is not in dispute that all the questions raised in the present appeals are squarely covered by the judgment of this Court in Samsung Electronics, we dispose of these appeals also in terms of the said judgment. In other words, in Samsung Electronics, all the questions, as raised in the instant appeals, stand answered in favour of the revenue and against the assessee. We direct the Assessing Officer to pass

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consequential orders as contemplated under Section 260(1A) of the Income Tax Act, 1961 after the Supreme Court finally dispose of the SLP (Civil appeal) arising from the judgment of this Court in Samsung Electronics. In other words, till then, the Assessing Officer shall keep the matter pending for passing consequential orders. However, liberty is reserved to the respondent-assessee to seek revival of these appeals in the event, the Supreme Court remands the matter.

Appeals are disposed of accordingly.

Sd/- JUDGE

Sd/- JUDGE

SPS

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