THE PR. COMMISSIONER OF INCOME TAX vs. M/S BPL LIMITED

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ITA/244/2022HC KarnatakaKAHC01008064202123 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 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 the case fell under any exceptions mentioned in the circulars. 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 findings were made on any of the specific issues raised by the Revenue, nor were any operative directions issued regarding the ITAT's order or the lower authorities' orders.

What were the facts?

The Revenue, represented by 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 25.10.2019 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order pertains to assessment years 1989-90 to 1999-2000 and confirmed an order of the Appellate Commissioner, which in turn confirmed an order of the Deputy Commissioner of Income Tax. The Revenue seeks to set aside the ITAT's order and confirm the order of the Deputy Commissioner. The appeal concerns substantial questions of law related to the allowance of bogus loss on a leaseback transaction, adjustment of losses under Chapter XIV-B, deletion of additions for excess depreciation, and depreciation on vehicles.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in law in allowing a loss of ₹1,81,25,000/- on account of a leaseback transaction as a business loss, when it was not substantiated by the assessee and the Tribunal failed to consider the assessing authority's reasoning, rendering the order perverse (Section 158BC of the Act). 2. Whether the Tribunal was correct in law in allowing the adjustment of a loss of ₹1,81,25,000/- claimed by the assessee while computing income under Chapter XIV-B of the Act, when such adjustment is not permitted under the said Chapter. 3. Whether the Tribunal's order was perverse as it deleted additions of ₹45,05,821/- and ₹35,92,358/- for excess depreciation on the basis that the disallowance was not supported by seized material, thus recording a finding contrary to the materials on record and Section 158BC of the Act. 4. Whether the Tribunal was correct in law in allowing depreciation of ₹6,34,480/- on vehicles, overlooking that they were put to use on or after 01.10.1994 and were eligible for only 12.5% depreciation. Assessee's contention: The tax effect in the appeal is less than ₹2 Crores, and therefore, the appeal should not be entertained in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's contention: 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 158BC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENGALURU IN IT(SS

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NC: 2024:KHC:39420-DB ITA No. 244 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD 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. 244 OF 2022 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU 560 095

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(1), PRESENT ADDRESS DCIT,CIRCLE1(1)(1) 2ND FLOOR , BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU 560 095 …APPELLANTS (BY SRI. RAVI RAJ Y V.,ADVOCATE A/W SRI DILIP M, ADVOCATE)

AND:

M/S BPL LIMITED BPL TOWERS NO.13, KASTURBA ROAD, BENGALURU 560 001 PAN AAACB 9461B …RESPONDENT (BY SRI. NARENDRA KUMAR J JAIN.,ADVOCATE)

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

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39420-DB ITA No. 244 of 2022

THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(SS)A NO. 42/BANG/2008 DATED 25/10/2019 FOR ASSESSMENT YEAR 1989-1990 TO 1999-2000 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1)(1), BENGLAURU AND ETC.

THIS APPEAL, COMING ON FOR FINAL 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 Raviraj Y.V, along with learned counsel Sri Dilip M, for appellants/Revenue and learned counsel Sri Narendra Kumar J Jain, 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 25.10.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(SS)A.No.42/Bang/2008 for the assessment year 1989-90 to 1999-2000, raising the following substantial questions of law:

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NC: 2024:KHC:39420-DB ITA No. 244 of 2022

“1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing bogus loss of `1,81,25,000/- on account of lease back transaction as a business loss when same is not substantiated by assessee and Tribunal failed to consider the reasoning’s of the assessing authority and as such the order passed is perverse in nature?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing the adjustment of loss of `1,81,25,000/- claimed by assessee while computing the income in terms of Chapter XIV B of the Act when same is not permitted to be allowed as per provisions set out in said Chapter?

3.

Whether on the facts and in the circumstances of the case, the order passed by Tribunal can be said as perverse in nature since Tribunal has deleted addition of `45,05,821/- and `35,92,358/- on excess claim of depreciation on the basis that the said disallowance was not based on any material seized during the search and hence recorded a finding contrary to materials on record and section 158BC of the Act?

4.

Whether the Tribunal is right in law in allowing depreciation amounting to `6,34,480/- on the vehicles overlooking the fact that the vehicles were put to use on/after 1/10/1994 and were only eligible for 12.5% depreciation? ”

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

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NC: 2024:KHC:39420-DB ITA No. 244 of 2022

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.

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 ND/List No.: 3 Sl No.: 0

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