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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF APRIL, 2022
PRESENT
THE HON’BLE MRS.JUSTICE S.SUJATHA
AND
THE HON’BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
I.T.A.No.59/2022
BETWEEN : M/S. GOPALAN ENTERPRISES [INDIA] PVT. LTD., NO.5, RICHMOND ROAD NO.48, MUSEUM ROAD BANGALORE-560025.
...APPELLANT
(BY SRI K.R.PRADEEP, ADV.)
AND : 1. THE COMMISSIONER OF INCOME TAX-1
BMTC BUILDING, 80 FEET ROAD
KORAMANGALA, BANGALORE-560095.
THE DEPUTY COMMISSIONER
OF INCOME-TAX
CIRCLE-3[1][2], BMTC BUILDING
80 FEET ROAD, KORAMANGALA
BANGALORE-560095.
…RESPONDENTS
(BY SRI E.I.SANMATHI, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 10.08.2021 PASSED IN ITA NO.922/BANG/2013, FOR THE ASSESSMENT YEAR 2006-2007, PRAYING THIS HON’BLE COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTION OF LAW AS MAY BE
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FORMULATED BY THE HON’BLE COURT AS DEEMED FIT; AND ETC.,
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
This appeal is filed by the assessee under Section 260-A of the Income Tax Act, 1961 (‘Act’ for short) challenging the order dated 10.08.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bangalore (‘Tribunal’ for short) in ITA No.922/Bang/2013 relating to the assessment year 2006-07.
The appellant – assessee is a company engaged in building, promoting and developing of land. Relating to the assessment year in question, the appellant filed its return of income and claimed deduction under Section 80IA(4)(iii) of the Act. The Assessing Officer completed the assessment under Section 143(3) of the Act and disallowed the claim made by the assessee, against which the appeal was filed before the CIT (Appeals), who by an order dated
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28.03.2013, placing reliance on the decision of the Income Tax Appellate Tribunal, Bengaluru, in the case of Primal Projects (P) Ltd., (139 TTJ 233), held that the assessee is entitled to deduction under Section 80IA(4)(iii) of the Act and directed the Assessing Officer to grant deduction. Being aggrieved, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 18.07.2014 dismissed the appeal against which, ITA No.11/2015 was filed by the revenue before this Court. This Court in ITA No.3/2015 filed by the revenue relating to the assessment year 2008-09, considering the arguments advanced by both the parties vis-à-vis the provisions of clause (iii) of sub-section (4) of Section 80IA of the Act and the Industrial Park Scheme, 2002 framed by the Central Government, has disposed of the matter. The relevant paragraph of the said order is quoted hereunder for ready reference:- “8. In the backdrop of aforesaid factual position, when we advert to the facts of the
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case, we find that the order of the Tribunal is cryptic and no finding has been recorded by the Tribunal whether or not the assessee has fulfilled the conditions laid down in the scheme. In paragraph 4 of the order, the Tribunal has recorded a finding that an identical issue has been dealt by it in the case of PRIMAL PROJECTS P. LTD. and the case of the assessee is also similar. However, no reasons have been assigned by the Tribunal. The Tribunal is the final fact finding authority and has to record the reasons for its conclusions. Since the Tribunal has failed to assign any reasons for recording the finding with regard to the fact whether or not the assessee has fulfilled with the terms and conditions laid down in the scheme, we are left with no option but to quash the order passed by the Tribunal. Therefore, it is not necessary to answer the substantial questions of law. The Tribunal shall decide the matter afresh and shall after affording an opportunity of hearing to the parties, shall record a finding whether the assessee has complied with the conditions
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laid down in the Industrial Park Scheme, 2002 and whether the assessee is eligible to claim deduction under Section 80IA(4)(iii) of the Act.”
ITA No.11/2015 relating to the assessment year in question was disposed of in terms of the judgment dated 09.11.2020 passed in ITA No.3/2015. Pursuant to the said order passed by this Court, the Tribunal has passed the impugned order remanding the matter to the Assessing Officer for re-consideration. Being aggrieved by the said order of the Tribunal, the assessee has preferred this appeal raising the following substantial questions of law: “1. Whether in the facts and circumstances of the case, Tribunal erred in giving a perverse finding contrary to the records resulting in miscarriage of justice to the assessee?
Whether in the facts and circumstances of the case, Tribunal is right in refusing to rely on the decision of the Hon’ble
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High Court of Karnataka in Primal Projects P. Ltd., even after the department had reported that the facts were similar?
Whether in the facts and circumstances of the case, tribunal was right in making a departure for the impugned year when on similar set of facts and law the same was allowed for the AY 2004-05?
Whether in the facts and circumstances of the case, Tribunal was right in taking a different approach when the claim u/s 80IB[4][iii] of the Act was already allowed in the initial year and the same ought to have been allowed for 10 consecutive assessment years?”
Learned counsel for the appellant - assessee submitted that the Tribunal grossly erred in not following the directions issued by this Court in ITA No.3/2015 disposed of on 09.11.2020. Despite all the material facts were made available before the Tribunal,
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the matter has been remanded back to the Assessing Officer by the Tribunal in gross violation of the directions issued by this Court. The remand order would give rise to third round of litigation on the same issue of deduction under Section 80IA(4)(iii) of the Act which is uncalled for. Thus, on this ground, the learned counsel seeks to answer the substantial questions of law in favour of the assessee and against the revenue.
Learned counsel for the revenue submitted that the factual aspects indeed were required to be considered by the Assessing Officer as no factual finding was given either by the Assessing Officer or the CIT (Appeals) inasmuch as the claim of the assessee that each industry is an independent and separate unit, capable of functioning on its own. Even as regards the applicability of Primal Projects (P) Ltd., referred to, by the assessee requires to be analysed by the Assessing Officer depending upon the factual aspects. Hence, no
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exception can be found with the impugned order. Accordingly, seeks for dismissal of the appeal.
We have carefully considered the arguments advanced by the learned counsel appearing for the parties and perused the material on record.
It is ex-facie apparent that the Co-ordinate bench of this Court while disposing of ITA No.3/2015 has observed that no finding has been recorded by the Tribunal whether or not the assessee has fulfilled the conditions laid down in the scheme. The Tribunal being final fact finding authority is required to record the reasons for its conclusion. It has been categorically observed that the Tribunal shall decide the matter afresh and shall after affording an opportunity of hearing to the parties, shall record a finding whether the assessee has complied with the conditions laid down in the Industrial Park Scheme, 2002 and whether the assessee is eligible to claim deduction under Section
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80IA(4)(iii) of the Act. This specific direction of this Court ought to have been complied with, in stricto sensu, by the Tribunal being the last fact finding authority. The Tribunal in second round of litigation instead of analyzing the material facts available on record has remanded the matter to the Assessing Officer which cannot be approved by this Court.
It is well settled law that when a direction is issued by the jurisdictional High Court, the Tribunal is expected to comply with the same in letter and spirit. Even assuming that no factual finding is recorded either by the Assessing Officer or the CIT (Appeals), that exercise ought to have been done by the Tribunal as the final fact finding authority which has got a co-extensive power with that of the Assessing Officer and CIT (Appeals). Accordingly, remanding the matter to the Assessing Officer is not the solution to the litigation which would open a third round of litigation making the
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assessee to suffer and the same is nothing but harassment to both the parties, unnecessarily delaying the entire process of adjudication. Hence, without answering the substantial questions of law, we deem it appropriate to set aside the order impugned and remand the matter back to the Tribunal to consider the directions issued by this Court in ITA No.3/2015 dated 09.11.2020 in letter and spirit and comply the same in an expedite manner in accordance with law.
Hence, the following ORDER i) The order dated 10.08.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bangalore in ITA No.922/Bang/2013 relating to the assessment year 2006-07 is set aside. ii) The matter is remanded back to the Tribunal to consider the directions issued by this
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Court in ITA No.3/2015 dated 09.11.2020 in letter and spirit and comply the same in an expedite manner in accordance with law. iii) All the rights and contentions of the parties are left open. iv) The appeal stands disposed of accordingly.
Sd/- JUDGE
Sd/- JUDGE
PMR