THE COMMISSIONER OF INCOME-TAX vs. M/S MANGALORE URBAN DEVELOPMENT AUTHORITY

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ITA/191/2020HC KarnatakaKAHC01029664202030 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 argued that the appeal should not be entertained due to the tax effect being below Rs. 2 Crores, citing CBDT Circular No. 09/2024. The Revenue sought liberty to revive the appeal if the matter fell within the exceptions of the mentioned circulars. In light of these submissions, the appeal was disposed of with liberty granted to the Revenue as prayed. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the substantial questions of law raised by the Revenue.

What were the facts?

The Commissioner of Income-Tax (Exemptions) and the Assistant Commissioner of Income-Tax (Exemptions) are the appellants (Revenue), challenging an order of the Income-Tax Appellate Tribunal (ITAT) for Assessment Year 2014-15. The respondent is M/s Mangalore Urban Development Authority (MUDA). The ITAT's order, dated December 4, 2019, in ITA No. 588/Bang/2018, is under challenge. The Revenue seeks to set aside the ITAT's order and confirm the orders of the lower appellate and assessing authorities. The appeal is filed under Section 260-A of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in remanding the matter to examine the applicability of the proviso to Section 2(15) of the Act, considering the assessee's objects fall under 'any other object of General Public Utility' and the assessee generates surplus and runs activities on a commercial basis, collecting charges that are commercial in nature with no charity involved? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the disallowance of depreciation, unabsorbed depreciation, and deficit carry forward made by the assessing authority, given that the assessee is registered under Section 12A of the Act and its code is self-contained, meaning normal provisions applicable to business concerns do not apply to a Trust? 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 CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's Contention: The Revenue sought liberty to revive the appeal if the matter falls within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(15),Section 12A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41619-DB ITA No. 191 of 2020

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. 191 OF 2020 BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX EXEMPTIONS, 6TH FLOOR, UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU-560027

2.

THE ASST. COMMISSIONER OF INCOME-TAX EXEMPTIONS, CIRCLE-1, GROUND FLOOR, ALBUQUERQUE HOUSE, OPP FORUM FIZA MALL PANDESHWAR, MANGALURU-575001. …APPELLANTS (BY SRI. SUSHAL TIWARI N.,ADVOCATE)

AND:

M/S MANGALORE URBAN DEVELOPMENT AUTHORITY URVA STORES,ASHOK NAGAR, MANGALURU-575006 PAN AAALC0002E …RESPONDENT (BY SRI. A MAHESH CHOWDHARY.,ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41619-DB ITA No. 191 of 2020

APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 588/BANG/2018 DATED 04.12.2019 FOR ASSESSMENT YEAR 2014-2015 ANNEXURE C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME-TAX,EXCEMPTIONS, CIRCLE-1, MANGALURU AND ETC.

THIS APPEAL, COMING ON FOR HEARING, 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 Sushal Tiwari, for appellants/Revenue and learned counsel Sri A.Mahesh Chowdhary, for the 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 04.12.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.588/Bang/2018 for the assessment year 2014-15, raising the following substantial questions of law: “1) Whether on the facts and in the circumstances of the case the Tribunal was right in law in remanding

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NC: 2024:KHC:41619-DB ITA No. 191 of 2020

the matter to examine applicability of proviso to section 2(15) of the Act even when the objects of assessee-MUDA will fall under the limb “any other object of General Public Utility” by the proviso to section 2(15) of the Act amended w.e.f. 1/4/2009 as the assessee is involved in generating such huge surplus year after year and is running its activities on commercial basis and when the assessee has collected aforesaid charges which activity is nothing but commercial activity and there is no charity involved in such activities?

2.

Whether on the facts and in the circumstances of the case the Tribunal was right in law in setting aside disallowance of depreciation, unabsorbed depreciation and deficit of carry forward by made by assessing authority even when assessee is not entitled to same considering that assessee is registered under section 12A of the Act and it’s a code by itself where normal provisions of the Act applicable to business concerns are not applicable to a Trust?”

3.

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

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NC: 2024:KHC:41619-DB ITA No. 191 of 2020

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

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 question of law is 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.: 0

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