THE COMMISSIONER OF INCOME TAX vs. M/S KANAKAPURA PLANNING AUTHORITY

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ITA/518/2022HC KarnatakaKAHC01050268202230 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal with liberty to the Revenue to revive it as prayed for by its counsel. The Court explicitly stated that the substantial questions of law are kept open to be adjudicated in an appropriate proceeding. This means the Tribunal's decision on the merits of the case, which granted registration under Section 12A to the assessee, was not examined or decided by the High Court in this instance. The reasoning behind this disposal was based on the submissions made by both parties concerning the tax effect and the applicability of CBDT circulars. Therefore, no finding was reached on whether the assessee's activities qualified for registration under Section 12A, nor was there any discussion on the interpretation of Section 2(15) and its proviso in relation to the assessee's operations. The operative direction was to dispose of the appeal with liberty to revive, leaving the substantial questions of law undecided.

What were the facts?

The Revenue, comprising the Commissioner of Income Tax (Exemptions) and the Income Tax Officer (Exemptions), filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated July 15, 2022, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2013-2014 and challenges the ITAT's decision to grant registration under Section 12A of the Act to the assessee, M/s Kanakapura Planning Authority. The ITAT's order confirmed the order of the Appellate Commissioner, which in turn upheld the order of the Income Tax Officer. The core of the dispute revolves around whether the assessee's activities qualified for registration under Section 12A, particularly in light of the proviso to Section 2(15) of the Act.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the assessee is entitled to registration under Section 12A of the Act, given that its objects fall under 'any other object of General Public Utility' as defined in Section 2(15), and its activities are hit by the proviso to Section 2(15) due to providing transport services on a commercial basis to all sections of society, generating huge surpluses year after year. 2. Whether the Tribunal was correct in holding that the assessee is entitled to registration under Section 12A, when its commercial functions, coupled with the huge surplus generated, are hit by the proviso to Section 2(15) of the Act. 3. Whether the Tribunal was correct in holding that the assessee is entitled to registration under Section 12A, when the assessee has not been involved in activities that are in the nature of any other general public activity. Assessee's Contention: The assessee argued that 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 September 17, 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 March 15, 2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 12A,Section 2(15)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41670-DB ITA No. 518 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. 518 OF 2022 BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX EXEMPTIONS, 6TH FLOOR UNITY BUILDING ANNEXE P KALINGA RAO ROAD BENGALURU 560027

2.

THE INCOME TAX OFFICER EXEMPTIONS WARD 3 6TH FLOOR UNITY BUILDING ANNEXE, P KALINGA RAO ROAD BENGALURU 560027 …APPELLANTS (BY SRI. DILIP M, ADVOCATE A/W SRI. RAVIRAJ Y V.,ADVOCATE)

AND:

M/S KANAKAPURA PLANNING AUTHORITY KHATA NO. 469/CA SAHAKARI RESIDENTIAL LAYOUT AGRAHARA NEW COLONY TUNGANI POST KANAKAPURA, RAMANGARA DISTRICT KARNATAKA 562117 PAN AAALK 1091R …RESPONDENT (BY SRI. GIRISH KUMAR N.,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 APPEAL AND SET ASIDE THE ORDERS PASSED

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41670-DB ITA No. 518 of 2022

BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 396/BANG/2022 DATED 15/07/2022 FOR ASSESSMENT YEAR 2013- 2014 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, EXEMPTIONS, WARD-3, BENGALURU AND ETC.

THIS APPEAL, 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 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. Girish Kumar. N., 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 15.07.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.396/Bang/2022 for the assessment year 2013-14, raising the following substantial questions of law:

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NC: 2024:KHC:41670-DB ITA No. 518 of 2022

“1. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that that the assessee is entitled for registration under section 12A of the Act, even when the objects of assessee will fall under the limb “any other object of General Public Utility” under section 2(15) of the IT Act and the activities of assessee under this limb will be hit by the proviso to section 2(15) of IT Act amended w.e.f. 1.4.2009 as the transport services are provided to all sections of the society on commercial basis like any other private transporter and generating such hugs surplus year after year and is running its activities on commercial basis? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled for registration under section 12A of the Act, even when the commercial functions clubbed with its huge surplus generated hit by proviso to section 2(15) of the Act? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was

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NC: 2024:KHC:41670-DB ITA No. 518 of 2022

correct in law in holding that the assessee is entitled for registration under section 12A of the Act, even when assessee has not involved in activities which are in nature of any other general public activity?”

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:41670-DB ITA No. 518 of 2022

counsel for the revenue. However, the questions of law are kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS List No.: 4 Sl No.: 0

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