THE COMMISSIONER OF INCOME TAX TDS vs. BIOCON LTD

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ITA/391/2023HC KarnatakaKAHC01027338202301 October 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 Court granted liberty to the Revenue to revive the appeal as prayed for by its counsel. However, the substantial questions of law admitted for consideration were kept open to be adjudicated in an appropriate proceeding. The Court did not decide on the merits of the questions of law. The operative direction was to dispose of the appeal with liberty to revive, and the questions of law were expressly left undecided.

What were the facts?

The Revenue, comprising the Commissioner of Income-Tax (TDS) and the Deputy Commissioner of Income-Tax (LTU), has filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 21.03.2023 passed by the Income-Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order was in relation to ITA No. 1248/Bang/2014 for the assessment year 2012-13. The appeal was admitted by the High Court on 12.06.2023. The assessee is Biocon Ltd. The dispute concerns the demand of tax under Section 201(1) and interest under Section 201(1A) of the Act, and the deductibility of TDS on provisions made.

What were the issues?

The High Court admitted the appeal to consider the following substantial questions of law: 1. Whether the Tribunal erred in law by holding that if the assessee proves payees are 'not identifiable', the assessing authority cannot demand tax under Section 201(1) and interest under Section 201(1A), despite no such exception being provided in Sections 201, 194, or 195 of the Act? 2. Whether the Tribunal's order is perverse in holding that if the actual payment made in a subsequent year is less than the year-end provision, the liability to deduct TDS arises only on the actual payment, contrary to the principle that TDS should also be made on provisions? Assessee's Contention: Smt. Tanmayee Rajkumar, learned counsel for the assessee, submitted that the tax effect in this appeal is less than Rs. 2 Crores. 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. Revenue's Contention: Sri. Dilip.M, learned counsel for the Revenue, requested liberty to revive the appeal if the matter falls within the exceptions provided 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 201,Section 201(1),Section 201(1A),Section 194,Section 195

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41185-DB ITA No. 391 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF OCTOBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 391 OF 2023

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX TDS, 4TH FLOOR, HMT BHAVAN, BELLARY ROAD, GANGANAGAR, BENGALURU-560 032.

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX LTU, PRESENT ADDRESS, DCIT, TDS, CRICLE-1(1), 4TH FLOOR, HMT BHAVAN, ROOM NO.407, BELLARY ROAD, GANGANAGAR, BENGALURU-560 032 …APPELLANTS

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

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41185-DB ITA No. 391 of 2023

AND:

BIOCON LTD 20TH KM, HOSUR ROAD, ELECTRONIC CITY, HEBBAGODI, BENGALURU-560 100 PAN NO.AAACB7461R …RESPONDENT

(BY SMT. TANMAYEE RAJKUMAR, ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1248/BANG/2014 DATED 21.03.2023 FOR ASSESSMENT YEAR 2012-2013 (ANNEXURE- C) AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, TDS, CIRCLE-1(1), BENGALURU, 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:41185-DB ITA No. 391 of 2023

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

Heard the learned counsel Sri.Dilip.M, along with Sri. Raviraj.Y.V., for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for 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 21.03.2022 passed by the Income Tax Appellate Tribunal, "A" Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1248/Bang/2014 for the assessment year 2012-13.

3.

This Court, admitted the appeal on 12.06.2023 to consider the following substantial questions of law:

1.

" Whether the Tribunal was right in law in holding that if the assesse is able to prove that payees are 'not identifiable' then assessing authority is not entitled to demand tax under section 201 (1) and interest under section 201(1A) of the ignoring that no such exception is provided under section 201 nor under section 194/195 of the Act?

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NC: 2024:KHC:41185-DB ITA No. 391 of 2023

2.

"Whether on the facts and in the circumstance of the case, the Tribunal's order can be said as Perverse in nature in holding that in case where actual payment made in subsequent year is less than the year-end provision made, that liability to deduct TDS shall arise only on the amount of actual payment in subsequent year which goes against the principle of TDS which is also required to be made on provisions made"?

4.

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.

5.

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:41185-DB ITA No. 391 of 2023

6.

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.: 2 Sl No.: 12

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