PR. COMMISSIONER OF INCOME TAX-3 vs. M/S INFOSYS LTD

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ITA/254/2024HC KarnatakaKAHC01045160202424 September 2026Bench: S.G.PANDIT,CHILLAKUR SUMALATHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the appeal was filed with a significant delay of 447 days, for which the explanation provided in the affidavits was insufficient and lacked cogent reasons. Specifically, there was a delay of over one year and three months between the approval to file the appeal and its actual presentation. The Court observed that the ITAT's order on the issue of disallowance under Section 14A was remanded to the Assessing Authority for computation in terms of Rule 8D of the Income Tax Rules, 1962. This remand followed the ITAT's earlier order for the same assessee for Assessment Year 2012-13. Given this remand for re-computation, the Court concluded that no substantial question of law arose for consideration at this stage. Consequently, the appeal was dismissed both on merits and on the ground of delay. The principle established is that appeals with unexplained and inordinate delays, especially when the substantive issue is remanded for re-adjudication, may not be entertained.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax-3 and the Deputy Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 30.11.2022 passed by the Income Tax Appellate Tribunal (ITAT), Bangalore, in IT(TP)A No. 509/Bang/2015 for Assessment Year 2010-11. The appeal challenged the ITAT's decision regarding disallowance under Section 14A of the Act. The Revenue also sought condonation for a delay of 447 days in filing the appeal, which was presented on 20.09.2024, despite receiving the ITAT's order on 13.11.2023. The delay was attributed to file movement and approval processes, with a significant gap between approval and filing.

What were the issues?

1. Whether on the facts and circumstances of the case, the Tribunal’s order is perverse in nature in setting aside addition made under Section 14A to the file of Assessing Authority ignoring that said disallowance has been made in accordance with parameters of Section 14A and conditions for invoking said provision is satisfied in present case? (Question of law and fact, concerning Section 14A of the Income Tax Act, 1961). Assessee's Contention: The respondent-assessee relied on the decision of a co-ordinate Bench in PRINCIPAL COMMISSIONER OF INCOME TAX v/s NOVELL SOFTWARE DEVELOPMENT INDIA (P) LTD., reported in (2021) 126 taxmann.com 29 (Karnataka), which was confirmed by the Apex Court, in respect of disallowance under Section 14A. Revenue's Contention: The appellant-Revenue argued that the disallowance under Section 14A was made in accordance with the parameters of the said section and its conditions were satisfied, implying the ITAT's order setting aside the addition was perverse.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 14A

AI-generated summary — verify with the full judgment below

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA INCOME TAX APPEAL NO. 254 OF 2024

BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX-3 KORMANGALA, BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 3(1)(1) BANGALORE. …APPELLANTS (BY SRI. Y V RAVIRAJ, ADV. FOR SRI E.I. SANMATHI, ADV.)

AND:

M/S. INFOSYS LTD., ELECTRONIC CITY, HOSUR ROAD BANGALORE- 560100 REP. BY ITS DIRECTOR PAN: AAAC14798L …RESPONDENT (BY MISS. TANMAYEE RAJKUMAR, ADV.)

THIS APPEAL IS FILED UNDER SEC. 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 30.11.2022 PASSED IN IT (TP)A NO.509/BANG/2015 AND ITA ASSESSMENT YEAR 2010- 2011, PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW

Digitally signed by NANJUNDACHARI Location: High Court of Karnataka HC-KAR AND /OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 30/11/2022 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO. 509/BANG/2015 FOR A.Y. 2010-11 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT AND HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA

ORAL JUDGMENT

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

The above appeal by the Revenue under Section 260-A of the Income Tax Act, 1961 (for short “the Act”) is directed against the order dated 30.11.2022 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bangalore (for short “Tribunal”) in IT(TP)A No.509/Bang/2015 for the assessment year 2010-11 (Annexure-A) insofar as disallowance under Section 14-A of the Act.

2.

The appellant-Revenue has raised the following Substantial question of law:

HC-KAR “Whether on the facts and circumstances of the case, the Tribunal’s order is perverse in nature in setting aside addition made under Section 14A to the file of Assessing Authority ignoring that said disallowance has been made in accordance with parameters of Section 14A and conditions for invoking said provision is satisfied in present case”?

3.

Along with the appeal, I.A.No.2/2026 is filed under Section 5 of the Limitation Act praying to condone the delay of 447 days in preferring the appeal. As the affidavit filed along with I.A.No.2/2026 was lacking sufficient cause, the Department has filed additional affidavit dated 11.09.2026. In the additional affidavit filed in support of the application for condonation of delay, it is stated that the Tribunal passed the order on 30.11.2022 and the Department received copy of the order of the Tribunal on 13.11.2023. The present appeal was presented before this Court on 20.09.2024. There is almost 2 years delay in preferring the appeal. Except the file movement, the affidavit would not give any other details. It is seen from the additional affidavit that the approval to file the appeal HC-KAR was given on 12.06.2023 and the file was sent to the Standing Counsel’s Office on 19.06.2023. More than one year three months thereafter, the present appeal is filed. No explanation for that period is forthcoming from the affidavit. In the absence of cogent acceptable reasons, this Court would not exercise its discretion to condone the delay.

4.

Be that as it may, the order of the Tribunal on the issue of disallowance under Section 14A of the Act is remanded to the Assessing Authority to compute the disallowance. As such, disallowance shall be computed in terms of Rule 8D of Income Tax Rules, 1962. The Tribunal, while remanding the matter followed its earlier order dated 28.11.2022 in IT(TP)A No.718/Bang/2017 in respect of the same assessee for the assessment year 2012-13.

5.

Learned counsel for the respondent placed reliance on the decision of a co-ordinate Bench in PRINCIPAL HC-KAR COMMISSIONER OF INCOME TAX v/s NOVELL SOFTWARE DEVELOPMENT INDIA (P) LTD., reported in (2021) 126 taxmann.com 29 (Karnataka) in respect of disallowance under Section 14A of the Act which was confirmed by Hon'ble Apex Court in SLP (Civil) Diary No(s). 17974/2023 dated 21.08.2023. Since the matter is remanded to re-compute disallowance in terms of Rule 8D of Income Tax Rules, 1962, we are of the considered view that no Substantial question of law would arise for consideration at this stage and accordingly, the appeal stands dismissed on merits as well as on delay.

SD/- (S.G.PANDIT) JUDGE

SD/- (DR.CHILLAKUR SUMALATHA) JUDGE

MPK CT:bms List No.: 1 Sl No.: 2

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