THE PR COMMISSIONER OF INCOME TAX vs. G N VENUGOPAL

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ITA/440/2022HC KarnatakaKAHC01041231202230 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 not maintainable. The Revenue sought liberty to revive the appeal if the case fell under the exceptions mentioned in the circulars. The Court granted this liberty. Consequently, the appeal was disposed of with the liberty granted to the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the questions of law regarding the taxability of land sale profits as business income or the applicability of Section 2(14).

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Assistant Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961. The appeal challenges an order dated April 11, 2022, passed by the Income Tax Appellate Tribunal, Bengaluru Bench. The assessment year in question is 2013-14. The Revenue seeks to set aside the Tribunal's order and confirm the order of the Appellate Commissioner, which in turn had confirmed the order of the Deputy Commissioner of Income Tax. The dispute revolves around the taxability of profits earned from the sale of lands.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, in the facts and circumstances and in law, the Tribunal was justified in holding that the assessee had not carried out any business in the purchase and sale of lands, and that the profits earned from such transactions were not taxable as business income? 2. Whether, in the facts and circumstances and in law, the Tribunal was justified in holding that the profits earned from the sale of purchased lands were not business income? 3. Whether, on the facts and in law, the Tribunal's order was perverse in accepting the assessee's contention that the whole of the consideration is exempt under Section 2(14) of the Income Tax Act, 1961? Contentions: Assessee: The tax effect in this appeal is less than Rs. 2 Crores, and 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: The Revenue sought liberty to revive the appeal in case 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 2(14)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41148-DB ITA No. 440 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH 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. 440 OF 2022 BETWEEN:

1.

THE PR COMMISSIONER OF INCOME TAX CENTRAL CIRCLE C R BUILDING QUEENS ROAD BENGALURU-560 001

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (4) (1) PRESENT ADDRESS DCIT CENTRAL CIRCLE 2(4) C R BUILDING QUEENS ROAD BENGALURU -560 001 …APPELLANTS (BY SRI. RAVI RAJ Y V.,ADVOCATE)

AND:

G N VENUGOPAL 344 GANIGARA BEEDI, 6TH WARD DEVANAHALLI TOWN DEVANAHALLI -562110 PAN -AEUPV5340J …RESPONDENT (BY SRI. BALRAM R RAO.,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 THEREIN, ALLOW THE

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41148-DB ITA No. 440 of 2022

APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 215/BANG/2020 DATED 11/04/2022 FOR ASSESSMENT YEAR 2013-2014 ANNEXURE C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(4), BENGALURU AND ETC.

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 MR JUSTICE C.M. POONACHA

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 Sri. Balaram. R Rao, 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 11.04.2022 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.215/Bang/2020 for the assessment year 2013-14, raising the following substantial questions of law:

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NC: 2024:KHC:41148-DB ITA No. 440 of 2022

“1. Whether in the facts and circumstances of the case and in law the Hon’ble Tribunal was justified in holding that the assessee had not carried out any business in purchase and selling lands and that the profits earned on such transactions is not taxable as business income? 2. Whether in the facts and circumstances of the case and in law the Hon’ble Tribunal was justified in holding that the profits earned from sale of lands purchased was not business income? 3. Whether on the facts of the case and in law, the Hon’ble Tribunal’s order can be said as perverse in nature in accepting the contention of the assessee that the whole of the consideration is exempt under section 2(14)?”

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.

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NC: 2024:KHC:41148-DB ITA No. 440 of 2022

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 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.: 34

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