PR. COMMISSIONER OF INCOME TAX vs. M/S SPR DEVELOPERS PVT LTD.,

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ITA/487/2023HC KarnatakaKAHC01037502202323 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 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 contended that the tax effect was below the threshold stipulated in CBDT Circular No. 09/2024, making the appeal non-maintainable. The Revenue sought liberty to revive the appeal if it fell within the exceptions of the circulars. The Court granted this liberty to the Revenue. Consequently, the appeal was disposed of without a decision on the merits of the substantial questions of law. The Court explicitly kept the questions of law open to be adjudicated in an appropriate proceeding. Therefore, no specific finding was reached on whether the Tribunal's order was perverse, whether income had accrued, or whether the factual matrix was properly analyzed. The operative direction was to dispose of the appeal with liberty to revive.

What were the facts?

The Revenue, comprising the Pr. 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 09.02.2022 passed by the Income Tax Appellate Tribunal (ITAT), C Bench, Bengaluru. The appeal pertains to Assessment Year 2008-2009 and challenges the ITAT's deletion of an addition made by the Assessing Officer. The addition related to advances received by the assessee, M/s SPR Developers Pvt Ltd., from two housing societies, Vijaya Bank Housing Co-operative Society and Syndicate Bank Retired Employee Welfare Association. The core of the dispute involves whether the transactions resulted in the accrual of income for the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal's order is perverse in deleting the addition on account of disallowance of advance received by the assessee from two housing societies, by holding that the transaction did not result in accrual of income, ignoring the assessee's admission before the CIT(A) that the agreed rate in the MOU for developing residential sites included the cost of land, and thus on the date of transfer, the assessee had accrued deemed profit as analyzed by the Assessing Officer? (Question of mixed law and fact, concerning accrual of income under the Income Tax Act, 1961). 2. Whether, on the facts and in the circumstances, the Tribunal's order is perverse in not appreciating that the assessee was not only a confirming party but also received payments from buyers, transferred lands to buyers, and registered the transfers, and that subsequent events cannot be considered as only the financial year matters? (Question of mixed law and fact, concerning the timing of income accrual). 3. Whether, on the facts and in the circumstances, the Tribunal's order is perverse in not analyzing the factual matrix of the case as done by the CIT(A) and Assessing Authority? (Question of mixed law and fact, concerning the Tribunal's scope of review). Assessee's Contention: 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's Contention: The Revenue sought liberty to revive the appeal if 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

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39229-DB ITA No. 487 of 2023

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. 487 OF 2023 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX KORAMANGALA BANGALORE

2.

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

AND:

M/S SPR DEVELOPERS PVT LTD., F-113, 2C AND D CENTRAL CHAMBERS, 2ND FLOOR, 2ND MAIN, GANDHINAGAR BENGALURU-560009 …RESPONDENT (BY SRI. NARENDRA KUMAR JAYANTILAL JAIN.,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 HONBLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 09/02/2022 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN ITA NO.297/BANG/2020 FOR ASSESSMENT YEAR

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39229-DB ITA No. 487 of 2023

2008-2009 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, INTEREST OF JUSTICE AND ETC.

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 Narendra Kumar J. Jain, 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 09.02.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.297/Bang/2020 for the assessment year 2008-09, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal’s

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NC: 2024:KHC:39229-DB ITA No. 487 of 2023

order is perverse in deleting the addition of on account of disallowance of advance received by assessee from two housing Societies viz., Vijaya Bank Housing Co- operative Society and Syndicate Bank Retired Employee Welfare Association by holding that transaction entered into by the assessee with said parties has not resulted in accrual of income ignoring that assessee itself admitted before CIT(A) that agreed rate of MOU for developing of residential sites by assessee-company included cost of land and as such on date of transfer of land, assessee has accrued deemed profit which has been deeply analyzed by assessing officer? 2. Whether on the facts and in the circumstances of the case, the Tribunal is perverse in nature in not appreciating that assessee is not only confirming party but also received the payments from buyers, transferred the lands to buyers, registered it as well. The subsequent events cannot be taken into consideration as what it matters is upto financial year only?

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NC: 2024:KHC:39229-DB ITA No. 487 of 2023

3.

Whether on the facts and in the circumstances of the case, the Tribunal is perverse in nature in not analyzing the factual matrix of the case which was done by CIT(A) and Assessing authority?

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:39229-DB ITA No. 487 of 2023

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.: 46

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