THE PR. COMMISSIONER OF INCOME-TAX CIT (A) vs. M/S CENTURY REAL ESTATE HOLDINGS PVT LTD

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ITA/25/2021HC KarnatakaKAHC01000260202118 July 2023Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the assessee's counsel submitted that all three questions of law raised in the appeal were covered by this Court's decision in I.T.A. No. 133/205, decided on 15.02.2021. The Revenue's counsel did not dispute this submission. Consequently, in view of the admitted position that the issues were covered by a prior judgment, the appeal was dismissed. The questions of law were answered in favour of the assessee and against the Revenue. No specific finding was recorded by the High Court on the merits of the ITAT's decision, as the appeal was disposed of based on the precedent.

What were the facts?

The appeal was filed by the Principal Commissioner of Income-tax and Assistant Commissioner of Income-tax (Revenue) against an order dated 24.06.2020 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 284/Bang/2020. The assessment year in question was 2014-2015. The Revenue challenged the ITAT's decision regarding disallowance under Section 14A of the Income Tax Act, 1961. The Revenue sought to set aside the ITAT's order and confirm the orders of the lower authorities, the Assistant Commissioner and the Appellate Commissioner.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in directing the assessing authority to restrict the disallowance under Section 14A to the amount of exempt income without analyzing the factual matrix and when the conditions of the provision were satisfied (Question of law). 2. Whether the Tribunal's order was perverse for not considering the findings and materials on record by the assessing authority in making the disallowance under Section 14A (Question of mixed law and fact). 3. Whether the Tribunal was justified in not determining whether the source of exempt income was investments or stock-in-trade and if it was correct in holding that the principle of capping disallowance to exempt income was applicable to all disallowances under Section 14A (Question of law). The Revenue contended that the Tribunal erred in restricting the disallowance and that its order was perverse. The Assessee argued that all three questions were covered by a previous decision of the High Court.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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NC: 2023:KHC:25019-DB ITA No. 25 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF JULY, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 25 OF 2021 BETWEEN :

1.

THE PR. COMMISSIONER OF INCOME-TAX, CIT (A) CENTRAL CIRCLE C.R.BUILDING QUEEN’S ROAD BENGALURU-560 001 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2) C.R.BUILDING, QUEEN’S ROAD BENGALURU-560 001 …APPELLANTS

(BY SHRI. M. DILIP, STANDING COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL)

AND :

M/S. CENTURY REAL ESTATE HOLDINGS PVT. LTD., NO.10/1, GROUND FLOOR LAKSHMINARAYANA COMPLEX PLACE ROAD BENGALURU-560 052 PAN: AADCC 0651M …RESPONDENT

(BY SHRI. ARAVIND V. CHAVAN, ADVOCATE) . . . .

Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA

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NC: 2023:KHC:25019-DB ITA No. 25 of 2021

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX 1961, ARISING OUT OF ORDER DATED 24.06.2020 PASSED IN ITA NO.284/BANG/2020 FOR THE ASSESSMENT YEAR 2014-2015 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.284/BANG/2020 DATED 24.06.2020 FOR ASSESSMENT YEAR 2014-2015 ANNEXUR-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2) BENGALURU AND ETC.

THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal directed against the order dated 24.06.2020 in ITA No.284/Bang/2020 passed by the ITAT1, has been admitted to consider the following questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law directing the assessing authority to restrict 14A disallowance to the amount of exempt income without analyzing factual matrix of the case and when conditions set out in said provisions and Rules framed thereunder are fully satisfied in case of assessee"?

2.

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in not considering the findings and materials brought on record by assessing authority in making disallowance under section 14A of the Act"?

3.

Whether on the facts and in the circumstances of the case, the Tribunal is justified in not giving a finding of fact as to whether the source of exempt income were investments or stock in trade and is right in law in holding that the principle of capping

1 Income Tax Appellate Tribunal

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NC: 2023:KHC:25019-DB ITA No. 25 of 2021

the disallowance to exempt income was applicable to all cases of disallowances made under section 14A of the Act?

2.

Heard Shri. M. Dilip, learned Standing Counsel for the Revenue and Shri. Aravind V. Chavan, learned Advocate for the respondent.

3.

At the outset, Shri. Aravind Chavan submits that all three questions raised in this appeal are covered by the decision of this Court in I.T.A. No.133/205 decided on 15.02.2021. The same is not disputed by Shri. Dilip, for the Revenue. 4. In view of the above submission, appeal is dismissed. The questions of law are answered in favour of the assessee and against the Revenue. No costs. Sd/- JUDGE

Sd/- JUDGE

SPS List No.: 1 Sl No.: 47

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