THE PR. COMMISSIONER OF INCOME TAX vs. M/S MYSORE MINERALS LTD.,

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ITA/511/2022HC KarnatakaKAHC01048275202226 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the appeal with liberty granted to the Revenue to revive it as prayed for by its counsel. The Court explicitly stated that the substantial questions of law were kept open to be adjudicated in an appropriate proceeding. This implies that no decision was made on the merits of the questions concerning the re-opening of assessment (Sections 148 and 143(3)) or the allowability of CSR expenses (Section 37(1) and Explanation 2). The operative direction was to dispose of the appeal based on the tax effect and the liberty granted, rather than deciding the substantive legal issues raised. No specific finding was recorded on any of the four questions of law.

What were the facts?

The Principal Commissioner of Income Tax (Revenue) filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated March 7, 2022, passed by the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Bengaluru. The appeal pertains to Assessment Year 2013-14 and challenges the ITAT's decision regarding the re-opening of assessment and the allowability of CSR expenses. The High Court admitted the appeal on March 6, 2023, to consider substantial questions of law. During the hearing, the assessee's counsel pointed out that the tax effect was less than Rs. 2 Crores, citing CBDT Circular No. 09/2024, and argued the appeal should not be entertained. The Revenue's counsel sought liberty to revive the appeal if the matter fell within exceptions under Circulars 09/2024 and 05/2024.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the ITAT was justified in setting aside the re-opening of assessment by holding it to be a 'change of opinion', ignoring the proviso to Section 148 of the Income Tax Act, 1961? 2. Whether the ITAT was justified in not appreciating that there was no change of opinion as the issue involved in re-opening was never specifically scrutinized during assessment proceedings under Section 143(3) of the Act? 3. Whether the ITAT was justified in allowing the claim of CSR expenses under Section 37(1) of the Act, in view of Explanation 2 to the said section? 4. Whether the ITAT was justified in not upholding the disallowance made under Section 37(1) when the assessee failed to establish that the expenditure was wholly and exclusively for the purpose of business? Assessee's Contention: The appeal should not be entertained due to the tax effect being less than Rs. 2 Crores, as per CBDT Circular No. 09/2024, which binds the Revenue. Revenue's Contention: Liberty to revive the appeal if the matter falls within exceptions under CBDT Circulars 09/2024 and 05/2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 148,Section 143(3),Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, B BENCH, BENGALURU,

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NC: 2024:KHC:40548-DB ITA No. 511 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH 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. 511 OF 2022 BETWEEN:

THE PR. COMMISSIONER OF INCOME TAX BMTC COMPLEX, KORAMANGALA, BENGALURU …APPELLANT (BY SRI. SANMATHI E.I., ADVOCATE) AND:

M/S MYSORE MINERALS LTD., (NOW MERGED WITH KARNATAKA STATE MINERALS CORPORATION LTD.) BMTC COMPLEX, SHANTINAGAR, TTMC BUILDING, A BLOCK, 5TH FLOOR, SHANTINAGAR BENGALURU – 560 027 PAN: AACCM2873L …RESPONDENT (BY SRI. MADHUSUDHAN, ADVOCATE)

THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 07/03/2022 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BENGALURU, IN APPEAL PROCEEDINGS IN ITA NO. 464/BANG/2020 (ANNEXURE-A) FOR THE ASSESSMENT YEAR 2013-2014 AND ETC.

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40548-DB ITA No. 511 of 2022

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

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

Heard the learned counsel Sri.Sanmathi.E.I., for appellant/Revenue and learned counsel Sri. Madhusudhan 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 07.03.2022 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.464/Bang/2020 for the assessment year 2013-14.

3.

This

Court,

admitted the appeal on 06.03.2023 to consider the following substantial questions of law:

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NC: 2024:KHC:40548-DB ITA No. 511 of 2022

1.

Whether on the facts and circumstances of the case and in law, the Tribunal was justified in setting aside the re-opening of the assessment in the case of the assessee by holding that the same is change of opinion, ignoring the proviso to section 148 of the IT Act, 1961?

2.

Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not appreciating the fact that there was no change of opinion since the issue involved in re-opening was never specially scrutinized during the course of the assessment proceedings u/s 143(3) of the IT Act, 1961?

3.

Whether on the facts and circumstances of the case and in law, the Tribunal was justified in allowing the claim of CSR expenses u/s 37(1) of the IT Act, 1961 in view of the Explanation 2 to the said section?

4.

Whether on the facts and in the circumstances of the case, the Tribunal was justified on the facts of

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NC: 2024:KHC:40548-DB ITA No. 511 of 2022

the case and in law, in not upholding the disallowance made under section 37(1) even though the assessee had failed to establish that this expenditure was wholly and exclusively for the purpose of business?

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.

6.

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:40548-DB ITA No. 511 of 2022

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.: 3

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