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

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ITA/192/2020HC KarnatakaKAHC01029672202030 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 it fell under exceptions in the circulars. The Court granted the liberty as prayed for by the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. Therefore, no decision was made on the merits of the questions of law raised by the Revenue regarding Section 2(15) and depreciation disallowances.

What were the facts?

The Revenue, represented by the Commissioner of Income-Tax and the Assistant Commissioner of Income-Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated December 4, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2013-14 and challenges the ITAT's decision to remand the matter for examination of the applicability of the proviso to Section 2(15) of the Act. The Revenue also contests the setting aside of disallowance of depreciation, unabsorbed depreciation, and deficit of carry forward made by the assessing authority. The assessee is M/s Mangalore Urban Development Authority (MUDA).

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' as amended from April 1, 2009, given the assessee's generation of huge surpluses, commercial operations, and collection of charges, indicating commercial activity without charity? 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 of carry forward made by the assessing authority, considering the assessee is registered under Section 12A and its normal provisions applicable to business concerns are not applicable to a Trust? Assessee's Contention: The assessee argued that 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 September 17, 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 March 15, 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:41620-DB ITA No. 192 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. 192 OF 2020 BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX 6TH FLOOR UNITY BUILDING ANNEXE MISSION ROAD, BENGLAURU 560 027

2.

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

AND:

M/S MANGALORE URBAN DEVELOPMENT AUTHORITY URVA STORES, ASHOK NAGAR MANGALURU 575 006 LPAN AAALC 0002E …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 APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 2091/BANG/2016 DATED 04.12.2019 FOR ASSESSMENT YEAR 2013-2014 ANNEXURE C

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41620-DB ITA No. 192 of 2020

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.2091/Bang/2016 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 was right in law in remanding the matter to examine applicability of proviso to

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NC: 2024:KHC:41620-DB ITA No. 192 of 2020

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:41620-DB ITA No. 192 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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