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

PDF · subscribers
ITA/522/2022HC KarnatakaKAHC01050269202230 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 argued 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 the case fell under exceptions mentioned in the circulars. The Court granted this liberty, disposing of the appeal with the caveat that the substantial questions of law are kept open for adjudication in an appropriate proceeding. The specific findings of the ITAT on the entitlement to Section 12A registration, the applicability of the proviso to Section 2(15), and the nature of the assessee's activities were not adjudicated on merits by the High Court. The operative direction was to dispose of the appeal with liberty to revive.

What were the facts?

The Revenue, comprising the Commissioner of Income Tax and the Income Tax Officer, 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 2015-16 and challenges the ITAT's decision to grant registration under Section 12A of the Act to the assessee, M/s Kanakapura Planning Authority. The Revenue contends that the assessee's objects and activities, particularly providing transport services on a commercial basis and generating significant surplus, fall under the proviso to Section 2(15) of the Act, thus disentitling it from such registration.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal was correct in law in holding that the assessee is entitled to registration under Section 12A of the Act, when its objects fall under 'any other object of General Public Utility' under Section 2(15) and its activities are hit by the proviso to Section 2(15) due to commercial operation and substantial surplus generation? (Question of law) 2. Whether, on the facts and in the circumstances, the Tribunal was correct in law in holding that the assessee is entitled to registration under Section 12A of the Act, when its commercial functions coupled with huge surplus generation are hit by the proviso to Section 2(15) of the Act? (Question of law) 3. Whether, on the facts and in the circumstances, the Tribunal was correct in law in holding that the assessee is entitled to registration under Section 12A of the Act, when the assessee has not involved in activities which are in the nature of any other general public activity? (Question of law) Assessee's contention: The appeal should not be entertained due to the tax effect being less than Rs. 2 Crores, citing CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's contention: Sought liberty to revive the appeal if the matter falls within 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 12A,Section 2(15)

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:41668-DB ITA No. 522 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. 522 OF 2022 BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX EXEMPTIONS 6TH FLOOR UNITY BUILDING ANNEXE P. KALINGA RAO ROAD, BENGALURU 56 0027

2.

THE INCOME TAX OFFICER EXCEMPTIONS, WARD -3, 6TH FLOOR UNITY BUILDING ANNEXE P. KALINGA RAO ROAD, BENGALURU 560 027 …APPELLANTS (BY SRI. DILIP M, ADVOCATE A/W SRI. RAVI RAJ Y V.,ADVOCATE)

AND:

M/S KANAKAPURA PLANNING AUTHORITY KHATA NO. 469/CA, SAHAKARI RESIDENTIAL LAYOUT AGRAHARA NEW COLONY TUNGANI POST KANAKAPURA 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

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:41668-DB ITA No. 522 of 2022

FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 397/BANG/2022 DATED 15/07/2022 FOR ASSESSMENT YEAR 2014- 2015 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.398/Bang/2022 for the assessment year 2015-16, raising the following substantial questions of law:

- 3 -

NC: 2024:KHC:41668-DB ITA No. 522 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

- 4 -

NC: 2024:KHC:41668-DB ITA No. 522 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

- 5 -

NC: 2024:KHC:41668-DB ITA No. 522 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

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Latest GST High Court judgments

Search GST case law →