THE PR. COMMISSIONER OF INCOME TAX CENTRAL vs. M/S MANIPAL EDUCATION AND MEDICAL GROUP INDIA PVT LTD.,

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ITA/225/2024HC KarnatakaKAHC01039614202426 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryRemanded

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 tax effect was below the threshold specified in CBDT Circular No. 09/2024, making the appeal not 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. Consequently, the appeal was disposed of without a decision on the merits of the substantial questions of law. The Court explicitly stated that the questions of law were kept open to be adjudicated in an appropriate proceeding. No finding was reached on the perversity of the Tribunal's order or the confirmation of interest-free funds based on previous years' facts.

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, before the High Court of Karnataka. The appeal challenges an order dated 08.02.2024 passed by the Income Tax Appellate Tribunal, Bengaluru ('Appellate Authority'), in M.P.No.1/Bang/2024 (in ITA.No.105/Bang/2023). The assessment year in question is 2015-16. The appeal concerns the correctness of the Tribunal's decision regarding certain tax implications for the assessee, M/s. Manipal Education and Medical Group India Pvt Ltd. The procedural history involves the assessee's submissions during assessment proceedings and the Tribunal's subsequent order.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal's order was perverse for not inquiring into the correctness of the assessee's facts and ignoring submissions that an additional loan from IDFC was used for purchasing a capital asset, as per Section 36(1)(iii) of the Income Tax Act, 1961. 2. Whether the Tribunal was correct in confirming that the assessee had interest-free funds based on facts from earlier assessment years (2013-14 & 2014-15) and applying them to the current assessment year (2015-16), as per Section 36(1)(iii) of the Income Tax Act, 1961. Contentions: 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 CBDT Circular No. 09/2024 dated 17.09.2024, which binds the revenue. The revenue contended that it should be granted liberty to revive the appeal if 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 36(1)(iii)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:40540-DB ITA No. 225 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH 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. 225 OF 2024 BETWEEN:

THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R BUILDING, QUEENS ROAD, BENGALURU-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2) 3RD FLOOR, C.R.BUILDING, QUEEN'S ROAD, BENGALURU-560 001. …APPELLANTS

(BY SRI. DILIP.M., ADVOCATE ALONG WITH SRI.Y.V.RAVIRAJ, ADVOCATE)

AND:

M/S. MANIPAL EDUCATION AND MEDICAL GROUP INDIA PVT LTD., 24/1, 15TH FLOOR,

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40540-DB ITA No. 225 of 2024

JW MARRIOT, BENGALURU - 560 001. PAN: AADCM 8103A REP.BY MANAGING DIRECTOR

…RESPONDENT

THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU, IN M.P. NO.1/BANG/2024 (IN ITA NO.105/BANG/2023) DATED 08.02.2024 FOR ASSESSMENT YEAR 2015-2016 (ANNEXURE-A) AND ETC.

THIS APPEAL IS 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

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NC: 2024:KHC:40540-DB ITA No. 225 of 2024

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

Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel 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 08.02.2024 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short ‘Appellate Authority’) in M.P.No.1/Bang/2024 (in ITA.No.105/Bang/2023) for the assessment year 2015-16, raising the following substantial questions of law: 1. "Whether on the facts and in the circumstances of the case and in law, the order of the tribunal was perverse in so far as the tribunal had not enquired into the correctness of the facts claimed by the assessee and had ignored the submissions made by the assesse itself during the assessment proceedings that the additional loan form IDFC was used for purchase of the capital asset"?

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NC: 2024:KHC:40540-DB ITA No. 225 of 2024

2.

"Whether on the facts and in the circumstances of the case and in law, the tribunal was right in confirming that the assesse has interest free funds based on the facts of the earlier assessment year 2013-14 & 2014-15 and applying the same to the current A.Y. i.e. 2015- 16"?

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 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.

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NC: 2024:KHC:40540-DB ITA No. 225 of 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

SMJ List No.: 3 Sl No.: 8

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