THE COMMISSIONER OF INCOME TAX vs. M/S KBD SUGARS & DISTILLERIES LTD

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ITA/170/2014HC KarnatakaKAHC01018401201414 December 2021Bench: S.SUJATHA,S VISHWAJITH SHETTY4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was squarely covered by previous decisions of the High Court, which in turn relied on decisions of other High Courts and the Apex Court. Therefore, no substantial question of law arose for consideration.

What were the facts?

The Revenue appealed against an ITAT order that disallowed proportionate disallowance of interest on loans. The Revenue argued that loans were for specific purposes and interest-free advances should be considered. The assessee contended that working capital loans were availed and interest-free advances would have flowed from them.

What were the issues?

Whether proportionate disallowance of interest on loans is justified when working capital loans were availed and interest-free advances were made.

Which sections of the Income-tax Act were involved?

Section 260-A

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF DECEMBER, 2021 PRESENT

THE HON’BLE MRS. JUSTICE S.SUJATHA AND

THE HON’BLE MR. JUSTICE S.VISHWAJITH SHETTY

I.T.A.No.170/2014 BETWEEN: 1. The Commissioner of Income-Tax,

C.R.Building, Queens Road,

Bangalore.

2.

The Asst. Commissioner of Income-Tax,

Circle-11(5),

Rashtrothana Bhavan,

Nrupathunga Road,

Bangalore.

… APPELLANTS

(By Sri K.V.Aravind, Adv.)

AND:

M/s. KBD Sugars & Distilleries Ltd., (Formerly Karnataka Breweries & Distilleries Pvt. Ltd.), No.17, Sankey Road, Bangalore.

… RESPONDENT

(By Sri V.Chandrashekar, Adv.)

This ITA is filed under Section 260-A of the Income Tax Act praying to set aside the order passed by the ITAT,

Bangalore, in ITA No.1363/Bang/2011 dated 22.11.2013 and confirm the order of the Appellate Commissioner confirming the order passed by the Assistant Commissioner of Income Tax, Circle-11(5), Bangalore.

This appeal coming on for Final Hearing, this day, S.Sujatha J., delivered the following:

JUDGMENT

1.

This appeal is admitted to consider the following substantial question of law. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessing officer and the Commissioner of Income Tax (Appeals) were not justified in resorting to the proportionate disallowance of interest of Rs.10,97,85,319/- on the ground that the loans were availed for specific purposes without appreciating that the assessee had availed working capital loans and that the interest free advances made out by the assessee would have flown out of usually flow out of working capital loans?"

2.

Learned Counsel for the respondent-assessee would submit that the issue involved herein is squarely covered by the decision of the cognate bench of this Court in the

case of the Commissioner of Income Tax Vs M/s. Brindavan Beverages Pvt. Ltd., in ITA No.67/2015 disposed of on 26.10.2016.

3.

Learned Counsel for the revenue could not dispute the same.

4.

We have perused the judgment passed in ITA No.67/2015, wherein the cognate bench of this Court placing reliance on the decision of the Mumbai High Court in the case of RELIANCE UTILITIES AND POWER LTD. - 313 ITR 340 as well as the decision of the Gujarat High Court in the case of RAGHUVIR SYNTHETICS LTD. - 354 ITR 222, has held that the said issue having been covered by the aforesaid decisions, no substantial question of law arises for consideration. It is pertinent to note that the decision in Reliance Utilities and Power Ltd., has been confirmed by the Hon'ble Apex Court in C.A.Nos.10 to 13 of 2019.

5.

Hence, we are of the considered view that no substantial question of law arises for consideration in this appeal.

Resultantly, the appeal stands dismissed.

Sd/- JUDGE

Sd/- JUDGE

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