THE PR COMMISSIONER OF INCOME TAX, CIT(A) vs. MESSERS VSL MINING COMPANY PVT LTD

PDF · subscribers
ITA/36/2020HC KarnatakaKAHC01001116202010 January 2023Bench: P.S.DINESH KUMAR,G BASAVARAJA4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided Question No. 1 in favour of the assessee and against the Revenue, noting that this issue had been decided against the Revenue in the case of 'Tata Elxsi Ltd. Vs. ACIT' (2015) 127 DRT 327 (Kar), a fact not disputed by the Revenue's counsel. Therefore, the ITAT's order allowing deduction under Section 10B was upheld for this specific issue. Regarding Question No. 2, the High Court decided to keep the question open, as it was the subject matter of other pending appeals. Consequently, the appeal was allowed in part, and the ITAT's order was set aside only concerning Question No. 1. No costs were awarded.

What were the facts?

This case involves an appeal by the Revenue (The Pr Commissioner of Income Tax and The Deputy Commissioner of Income Tax) against an order dated 28.06.2019 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru, in ITA No. 1854/Bang/2013 for the Assessment Year 2008-2009. The assessee is M/s VSL Mining Company Pvt. Ltd. The appeal was filed under Section 260-A of the Income Tax Act, 1961, seeking to set aside the ITAT's order which had allowed the assessee's claim for deduction under Section 10B and also addressed the cognizance of seized material in regular assessment proceedings. The High Court admitted the appeal to consider specific questions of law.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the assessee-company is entitled to deduction under Section 10B of the Income Tax Act, 1961, despite not exporting articles to satisfy the conditions of the section. The Revenue contended that the assessee failed to meet the export criteria for Section 10B. The assessee relied on the decision in 'Tata Elxsi Ltd. Vs. ACIT'. 2. Whether the assessing authority can take cognizance of seized material in proceedings under Section 143(3) of the Act without invoking Section 153C, given that there is no bar in Section 143(3), Section 153C, or any other provision preventing such cognizance in regular assessments. The Revenue argued that seized material can be considered in regular assessments. The assessee's arguments on this point are not explicitly recorded, but the Revenue's stance is presented.

Which sections of the Income-tax Act were involved?

Section 10B,Section 143(3),Section 153C,Section 260-A

AI-generated summary — verify with the full judgment below

- 1 -

ITA No. 36 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JANUARY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 36 OF 2020 BETWEEN: 1. THE PR COMMISSIONER OF INCOME TAX, CIT(A) 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 (3), PRESENT ADDRESS DCIT, CIRCLE-2 (1) (2), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095 …APPELLANTS (BY SRI. ARAVIND K V.,ADVOCATE) AND: 1. MESSERS VSL MINING COMPANY PVT. LTD., HOUSE OF LAD, PALACE ROAD, SANDUR, KARNATAKA -583 119. …RESPONDENT (BY SRI. A SHANKAR, SENIOR COUNSEL FOR SRI LAVA M.,ADVOCATE)

Digitally signed by MADHURI S Location: High Court of Karnataka

- 2 -

ITA No. 36 of 2020

THIS ITA UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/06/2019 PASSED IN ITA NO. 1854/BANG/2013, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING TO 1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1854/BANG/2013 DATED 28/06/2019 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE-D AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(2), BENGALURU AND ETC.,

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal by the Revenue, challenging the order dated 28.06.2019 in ITA No.1854/Bang/2013 passed by Income Tax Appellate Tribunal, Bengaluru has been admitted to consider following questions of law:

"1. Whether on the facts and circumstances of the case, it is submitted that the tribunal erred in holding that assessee-company is entitled for deduction under section 10B of the Act without appreciating that the assessee-

- 3 -

ITA No. 36 of 2020

company has not exported Article to satisfy the conditions set out in section 10B of the Act?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessing authority cannot take cognizance of the seized material in the proceedings under section 143(3) of the Act without invoking provisions of section 153C of the Act by ignoring that there is no bar section 143(3) nor under section 153C or under any other provisions of the Act to take cognizance of seized material in regular assessment?"

2.

At the outset Shri.A.Shankar, learned Senior Advocate for the assessee submitted that question No.1 has been answered against Revenue in “Tata Elxsi Ltd., Vs. ACIT”.1 Shri. K.V. Aravind, learned Senior Standing Counsel for the Revenue does not dispute the same. Shri.Aravind also submitted that question No.2 is the subject matter in other appeals and the same may be kept open.

1 (2015) 127 DRT 327 (Kar)

- 4 -

ITA No. 36 of 2020

3.

The question No.1 is answered in favour of the assessee and against the Revenue. Question No.2 is kept open.

4.

Hence, the following: ORDER

i) Appeal is allowed in part.

ii) Order dated 28.06.2019 in ITA No.1854/Bang/2013 passed by Income Tax Appellate Tribunal, Bengaluru is set aside so far as it relates to question No.1.

iii) Question No.2 is kept open.

No costs.

Sd/- JUDGE

Sd/- JUDGE

More judgments on Section 10B

All 1,217 judgments and leading authorities on Section 10B →

Recent GST High Court judgments

Search GST case law →