THE PR COMMISSIONER OF INCOME TAX vs. LATE SMT K LEELAVATHY

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ITA/94/2023HC KarnatakaKAHC01010814202327 September 2024Bench: S.G.PANDIT,C.M. POONACHA6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal in terms of Circular No. 09/2024 dated September 17, 2024, granting liberty to the Revenue to revive the appeal 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. The judgment does not provide a decision on the merits of the substantial questions of law raised by the Revenue. The reasoning for the disposal is based on the tax effect being below the threshold stipulated in the CBDT circular and the agreement between the parties regarding the procedure for disposal. No specific findings were made on the perversity of the Tribunal's order, the classification of the land as agricultural or non-agricultural, or the applicability of capital gains tax. The operative direction is to dispose of the appeal with liberty to revive, keeping the questions of law open.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income-Tax and the Deputy Commissioner of Income-Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, before the High Court of Karnataka. The appeal challenges an order dated April 18, 2022, passed by the Income-Tax Appellate Tribunal (ITAT), Bengaluru, in ITA No. 752/Bang/2019. The assessment year in question is 2006-07. The Revenue seeks to set aside the ITAT's order and confirm the orders of the lower appellate authorities, which had upheld the Assessing Officer's assessment. The dispute revolves around the classification of land sold by the assessee and its taxability under capital gains provisions.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal's order is perverse in holding that additions made by the assessing authority were not based on incriminating materials, contrary to the findings of the assessing authority and the CIT(A). 2. Whether the Tribunal was correct in law in holding that the land subject to sale was agricultural land as on the date of sale, exempt from capital gains under Section 2(14) read with Sections 45 and 48 of the Act, despite it being converted non-agricultural land and recorded as such in municipal records. 3. Whether the Tribunal's order is perverse in holding that the lands in question are not non-agricultural lands, ignoring the conditions set out in Section 2(14) and the assessee's failure to seek reversal of revenue record entries. 4. Whether the Tribunal's order is perverse in holding that the lands in question are not non-agricultural lands, ignoring the materials on record and the findings of the Assessing Authority and the CIT(A). 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 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 2(14),Section 45,Section 48

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH 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.94 OF 2023

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME-TAX 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095.

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(3), PRESENT ADDRESS ITO,WARD-5(2)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095.

…APPELLANTS (BY SRI. DILIP.M., ADVOCATE A/W SRI. RAVIRAJ.Y.V., ADVOCATE)

AND:

LATE SMT.K. LEELAVATHY BY L/R SHRI M.THIMMEGOWDA #F-113, CENTRAL CHAMBERS,

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

2-C & D, 2ND FLOOR, 2ND MAIN, GANDHINAGAR, BENGALURU-560 009. PAN: ABRPL 1523B. …RESPONDENT

(BY SRI. NARENDRA KUMAR J.JAIN, ADVOCATE)

THE INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 752/BANG/2019 DATED 18.04.2022 FOR ASSESSMENT YEAR 2006-2007 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-5(2)(1), 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

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

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

Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and 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 18.04.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short ‘Appellate Authority’) in ITA.No.752/Bang/2019 for the assessment year 2006-07, raising the following substantial questions of law: "1. "Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal has held that additions made by assessing authority are not on basis of incriminating materials ignoring the findings of the assessing author which has been rightly up held by CIT(A)"?

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

2.

"Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in holding that land which is subject matter of sale is agricultural land as on date of sale inn view of cultivation of land and as such the same is exempt from capital gains in view of Section 2(14) of the Act read with section 45 & 48 of the Act ignoring that as on date of sale land sold were converted non agricultural land which cannot be considered as agricultural land and also mentioned as non agricultural property in municipal records"?

3.

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in holding that lands in question are not non agricultural lands ignoring that conditions set out in section 2(14) are satisfied to hold that lands sold are non agricultural lands and assesse had not sought reversal of entries made in revenue records"?

4.

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

perverse in holding that lands in question are not non- agricultural lands ignoring materials on record and findings of Assessing Authority as well as of CIT(A)"?

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 in terms of Circular No.09/2024 dated

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NC: 2024:KHC:40655-DB ITA No. 94 of 2023

17.09.2024, 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

SMJ

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