PR COMMISSIONER OF INCOME TAX-3 vs. M/S PROMAC ENGINEERING INDUSTRIES LTD

PDF · subscribers
ITA/159/2022HC KarnatakaKAHC01008823202224 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal based on the submissions made by both parties. The assessee contended that the tax effect was below the threshold stipulated in CBDT Circular No. 09/2024, making the appeal non-maintainable. The Revenue sought liberty to revive the appeal if exceptions under the circulars applied. The Court granted the liberty as prayed for by the Revenue. However, the substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No specific finding was given on the merits of the FTC claim or the applicability of Section 90 and the DTAAs. The operative direction was to dispose of the appeal with liberty to revive, leaving the questions of law undecided on merits.

What were the facts?

The Revenue, comprising the Pr. Commissioner of Income Tax-3 and the Assistant Commissioner of Income Tax, Circle 5(1)(2), filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated August 17, 2021, passed by the Income Tax Appellate Tribunal, 'C' Bench, Bengaluru. The appeal pertains to Assessment Year 2014-15 and challenges the Tribunal's decision regarding the assessee, M/s Promac Engineering Industries Ltd. The High Court of Karnataka admitted the appeal to consider substantial questions of law concerning the assessee's claim for Foreign Tax Credit (FTC) in respect of USA, Japan, and Germany.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessing authority was not correct in restricting the assessee's claim for Foreign Tax Credit (FTC) concerning USA, Japan, and Germany, despite the assessee not being entitled to such a claim as per Section 90 of the Act and the respective Double Taxation Avoidance Agreements (DTAAs)? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal's order can be considered perverse in holding that the assessee is eligible for the full claim made under Section 90 of the Act relating to FTC, even when the conditions stipulated in the said section were not satisfied by the assessee concerning the restricted amount/turnover, and when the decision relied upon by the Tribunal had reached finality? (Question of mixed law and fact) Assessee's contention: The tax effect in this appeal is less than Rs. 2 Crores, and therefore, the appeal should not be entertained by the Revenue in view of Circular No. 09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes, which binds the Revenue. Revenue's contention: The learned counsel for the Revenue sought liberty to revive the appeal in case the matter falls within the exceptions under Circular No. 09/2024 dated 17.09.2024 and Circular No. 5/2024 dated 15.03.2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 90

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:39730-DB ITA No. 159 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 159 OF 2022 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX-3, BMTC COMPLEX, KORAMANGALA, BANGALORE.

2.

ASSISTANT COMMISIONER OF INCOME TAX CIRCLE 5(1)(2), BMTC COMPLEX, KORAMAGNALAL, 6TH BLOCK, BENGLAURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE) AND:

1.

M/S PROMAC ENGINEERING INDUSTRIES LTD., NO.1, ANJANAPURA POST, AVALAHALLI BENGLAURU – 560062, PAN AAAC817R. …RESPONDENT (BY SRI SUDHEENDRA B R, ADVOCATE)

THE APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 17/08/2021 PASSED IN ITA NO.501/BANG/2018, FOR THE ASSESSMENT YEAR 2014-2015 PRAYING THIS HON’BLE COURT TO: (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS FIT AND ETC.

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:39730-DB ITA No. 159 of 2022

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.Sudeendra B.R. for respondent/assessee.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 17.08.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.501/Bang/2018 for the assessment year 2014-15.

3.

This

Court,

admitted the appeal on 24.02.2022 to consider the following substantial question of law:

- 3 -

NC: 2024:KHC:39730-DB ITA No. 159 of 2022

“1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessing authority is not right in restricting claim of assessee relating to Foreign Tax Credit in respect of USA, Japan and Germany even though assessee is not entitled for such claim as per section 90 of the Act coupled with provisions of respective Double Taxation Avoidance Agreement's (DTAA's) entered into by India?

2.

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in holding that assessee is eligible for full claim made under section 90 of the Act relating to FTC even when conditions set out in said section are not satisfied in case of assessee with respect of restricted amount/turnover and when decision relied upon by Tribunal has reached finality?”

4.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct

- 4 -

NC: 2024:KHC:39730-DB ITA No. 159 of 2022

Taxes. It is also submitted that the aforesaid Circular binds the revenue.

5.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE MPK List No.: 2 Sl No.: 38

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →