THE COMMISSIONER OF INCOME TAX vs. MR.ABDUL WAHAB

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ITA/249/2015HC KarnatakaKAHC01031234201523 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 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 contended that the tax effect was below the threshold stipulated in CBDT Circular No. 09/2024, making the appeal not maintainable. The revenue sought liberty to revive the appeal if it met the exceptions outlined in the circulars. The Court granted this liberty to the revenue. Consequently, the appeal was disposed of without deciding the substantial question of law on its merits. The question of law was expressly kept open to be adjudicated in an appropriate proceeding. No specific finding was given on whether Section 2(47) was satisfied or if a transfer of property occurred.

What were the facts?

The Revenue, comprising the Commissioner of Income Tax and the Dy. Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated December 19, 2014, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru Bench 'A'. The appeal pertains to Assessment Year 2006-07 and concerns the respondent-assessee, Mr. Abdul Wahab. The core of the dispute lies in the ITAT's finding that no capital gains arose because there was no transfer of property, despite the Revenue's contention that the ingredients of Section 2(47) of the Act were satisfied. The appeal was filed before the High Court of Karnataka.

What were the issues?

1. Whether, on the facts and circumstances, the Tribunal was right in holding that there was no transfer of property by the assessee and consequently no capital gains arose, even when the ingredients of Section 2(47) of the Income Tax Act, 1961, were satisfied? (Question of law) Assessee's Contention: The assessee argued that the appeal should not be entertained by the revenue due to the tax effect being less than Rs. 2 Crores, citing Circular No. 09/2024 dated September 17, 2024, issued by the Central Board of Direct Taxes (CBDT), which binds the revenue. Revenue's Contention: The revenue requested liberty to revive the appeal if the matter falls within the exceptions provided in CBDT Circular No. 09/2024 dated September 17, 2024, and Circular No. 5/2024 dated March 15, 2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(47)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39238-DB ITA No. 249 of 2015

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. 249 OF 2015 BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX BANGALORE

2.

DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(3) BANGALORE …APPELLANTS (BY SRI. E I SANMATHI .,ADVOCATE)

AND:

MR.ABDUL WAHAB NO.292, 2ND CROSS, RAHAMATHNAGAR, BANGALORE PAN - AAKPW2099P …RESPONDENT (BY SRI. B.S.BALACHANDRAN.,ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 19/12/2014 PASSED BY THE ITAT, 'A' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO. 527/BANG/2013 FOR A.Y.2006-2007 AND ETC.

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39238-DB ITA No. 249 of 2015

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.Sanmathi E.I., for appellants/Revenue and learned counsel Sri.B.S.Balachandran, learned counsel 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 19.12.2014 passed by the Income Tax Appellate Tribunal, Bengaluru Bench ‘A’, Bengaluru (for short, ‘Appellate Authority’) in ITA No.527/Bang/2013 for the assessment year 2006-07, raising the following substantial question of law:

“Whether on facts and circumstances, the Tribunal was right in holding that

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NC: 2024:KHC:39238-DB ITA No. 249 of 2015

there was no transfer of the property by the assessee and as such no capital gains arise even when the ingredients of Section 2(47) of the Income Tax Act, 1961, are clearly satisfied in the case of assessee?”

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.

5.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned

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NC: 2024:KHC:39238-DB ITA No. 249 of 2015

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.: 1 Sl No.: 54

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