M/S. SASKEN COMMUNICATION vs. THE INCOME TAX OFFICER

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ITA/269/2013HC KarnatakaKAHC01022070201302 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
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What did the High Court hold?

The High Court of Karnataka, in terms of the order passed by the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. (supra), answered the question of law in favour of the Assessee and against the Revenue. The ITAT's order dated 22.03.2013 in ITA.No.900/B/2012 was quashed to the extent of levying interest under Section 201(1A). The Court granted liberty to the respondent-Revenue to file a review petition based on the outcome of their pending review before the Hon'ble Apex Court, acknowledging the observations in GRACEMAC CORPORATION (2023) 456 ITR 135 (SC) regarding the need for an end to litigation. The primary finding was that the levy of interest under Section 201(1A) was not sustainable based on the precedent set by the Supreme Court.

What were the facts?

The assessee, M/s. Sasken Communication Technologies Ltd., filed an appeal before the High Court of Karnataka challenging an order dated 22.03.2013 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 900/Bang/2012. The appeal was filed under Section 260-A of the Income Tax Act, 1961. The core of the dispute revolved around the levy of interest under Section 201(1A) of the Income Tax Act. The assessee contended that a Supreme Court judgment directly addressed the issue and was in their favour. The Revenue, represented by the Income Tax Officer (International Taxation), Ward 2(1), Bengaluru, was unable to dispute the assessee's contention.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Honourable ITAT was right in law in upholding the action of the Learned Respondent in levying interest under Section 201(1A) of the IT Act? (Question of law) Assessee's Contention: The assessee argued that the question of law has been definitively answered by the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. v. COMMISSIONER OF INCOME-TAX reported in (2021) 432 ITR 471 (SC), and that the said question is answered in favour of the Assessee. Therefore, the appeal should be allowed. Revenue's Contention: The Revenue's counsel was not in a position to dispute the assessee's contention. However, the Revenue later sought liberty to file a review petition before the Hon'ble Apex Court if their pending review petition in R.P.Nos.1422-1497/2021 in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. (supra) was successful.

Which sections of the Income-tax Act were involved?

Section 201(1A),Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:35619-DB ITA No. 269 of 2013

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND 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.269 OF 2013 BETWEEN:

M/S. SASKEN COMMUNICATION TECHNOLOGIES LTD., #139/25, DOMLUR RING ROAD BENGALURU 560071 …APPELLANT (BY SRI. S.SHARATH, ADVOCATE) AND:

THE INCOME TAX OFFICER (INTERNATIONAL TAXATION) WARD 2(1), BENGALURU …RESPONDENT (BY SRI.RAVI RAJ Y.V., ADVOCATE)

THE ITA IS FILED UNDER SEC.260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 22/03/2013 PASSED IN ITA NO.900/BANG/2012, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ETC.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:35619-DB ITA No. 269 of 2013

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

This appeal is by the Assessee challenging the order dated 22.3.2013 in ITA.No.900/B/2012.

2.

The appeal is filed raising the question of law for consideration, which reads as follows: "Whether on the facts and in the circumstances of the case, the Honourable ITAT was right in law in upholding the action of the Learned Respondent in levying interest under Section 201(1A)of the IT Act?"

3.

Sri. S.Sharath, learned counsel appearing for the appellant would submit that the above stated question of law is answered by the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. v. COMMISSIONER OF INCOME-TAX reported in (2021) 432 ITR 471 (SC) and the said question is answered in favour of the Assessee. In view of the same, learned counsel prays for allowing the appeal.

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NC: 2024:KHC:35619-DB ITA No. 269 of 2013

4.

Learned counsel Sri. Ravi Raj.Y.V. for the respondent-Revenue is not in a position to dispute the contention of learned counsel for the appellant.

5.

Taking note of the above, in terms of the order passed by the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. (supra), we answer the above question of law in favour of the Assessee and against the Revenue.

6.

Learned counsel for the Revenue would submit that the Revenue has preferred Review Petition before the Hon'ble Apex Court in R.P.Nos.1422-1497/2021 praying to review the order passed in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. (supra) and prays for liberty to file review in case the Revenue succeeds before the Hon'ble Apex Court. On the other hand, learned counsel appearing for the appellant would place reliance on the decision in the case of COMMISSIONER OF INCOME-TAX v. GRACEMAC CORPORATION reported in (2023) 456 ITR 135 (SC)

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NC: 2024:KHC:35619-DB ITA No. 269 of 2013

to contend that the Hon'ble Apex Court has observed that there must be an end to litigation otherwise, the rights of persons would be in an endless confusion and fluidity and justice would suffer.

7.

Learned counsel for the Revenue is seeking liberty to file review petition depending upon the outcome of the review pending before the Hon'ble Apex Court, apparently because of the observation made by the Hon'ble Apex Court at Paragraph Nos.6 and 7 in GRACEMAC CORPORATION case (supra).

8.

We have gone through the above decision and deem it appropriate to grant liberty to the respondent- Revenue to file review petition based on the outcome of the review pending before the Hon'ble Apex Court and it is for the respondent-Revenue to make out a case for review.

Accordingly, appeal is allowed; question of law is answered in favour of the Assessee and against the

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NC: 2024:KHC:35619-DB ITA No. 269 of 2013

Revenue and the order dated 22.3.2013 in ITA.No.900/B/2012 is quashed to the above extent.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

SMJ

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