THE PR COMMISSIONER OF INCOME TAX, vs. M/S SILICON ESTATES,

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ITA/166/2024HC KarnatakaKAHC01029145202430 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the tax effect in the appeal was less than Rs. 2 Crores, rendering the appeal not maintainable at the instance of the Revenue in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. The Revenue's counsel sought liberty to revive the appeal if the matter fell within the exceptions of Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024. The Court disposed of the appeal with the liberty as prayed for by the Revenue's counsel. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 04.12.2023 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to assessment year 2013-14 and challenges the ITAT's decision to allow a deduction under Section 80IB(10) to the assessee, M/s Silicon Estates. The Revenue contends that the assessee violated specific clauses of Section 80IB(10). The appeal was admitted for hearing by the High Court of Karnataka.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal erred in law by allowing deduction under Section 80IB(10) when the assessee allegedly violated clauses (e) and (f) of Section 80IB by allotting more than one residential unit in the housing project to any person not being an individual. 2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in law by allowing proportionate relief despite the explanatory Circular No. 5/2010 dated 03.03.2010 mandating cumulative compliance of conditions in clauses (a) to (f) of Section 80IB(10), requiring all specified conditions to be met in full for the deduction. Assessee's Arguments: Not recorded in the judgment. Revenue's Arguments: The Revenue argued that the assessee violated clauses (e) and (f) of Section 80IB(10) and that the conditions for deduction under Section 80IB(10) are cumulative as per Circular No. 5/2010.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80IB(10)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41541-DB ITA No. 166 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH 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. 166 OF 2024 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU – 560095

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4) PRRESENT ADDRESS ITO, WARD-1(2)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560095 …APPELLANTS (BY SRI. DILIP M, ADVOCATE A/W SRI. Y V RAVIRAJ .,ADVOCATE)

AND:

M/S SILICON ESTATES, 14, 6TH FLOOR, GENEVA HOUSE, CUNNINGHAM ROAD, BENGALURU - 560001 PAN - ABEFS6150N REP BY MANAGING DIRECTOR …RESPONDENT (RESPONDENT SERVED)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE,

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41541-DB ITA No. 166 of 2024

ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGLAURU IN ITA NO. 25/BANG/2021 DATED 04.12.2023 FOR ASSESSMENT YEAR 2013- 2014 ANNEXURE-A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-1 (2) (1), BENGALURU AND ETC.

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

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. Dilip. M., along with Sri. Raviraj. Y.V., for appellants/Revenue.

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 04.12.2023 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.25/Bang/2021 for the assessment year 2013-14, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing deduction under

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NC: 2024:KHC:41541-DB ITA No. 166 of 2024

section 80IB(10),without appreciating that the assessee violated clause (e) and (f) of section 80IB by allotting more than one residential units in the housing project to any person not being an individual?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing proportionate relief even though the explanatory circular No.5/2010 dated 3.3.2010 mandates that the conditions contained in clauses (a) to

(f) of section 80IB(10) are cumulative compliance, therefore for deduction under section 80IB(10) all the conditions specified in clause would have to be met in full?”

3.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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 Taxes. It is also submitted that the aforesaid Circular binds the revenue.

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NC: 2024:KHC:41541-DB ITA No. 166 of 2024

4.

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. 5. 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 questions of law are kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS List No.: 4 Sl No.: 20

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