THE PR.COMMISSIONER OF INCOME TAX CIT (A) vs. M/S KBD SUGARS & DISTILLERIES LTD

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ITA/556/2016HC KarnatakaKAHC01044456201614 December 2021Bench: S.SUJATHA,S VISHWAJITH SHETTY4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT was justified in deleting the additions. The court relied on its previous decisions in similar cases concerning Section 14A and Section 40A(2).

What were the facts?

The Revenue appealed against the ITAT's decision to delete additions made under Section 14A and Section 40A(2). The additions related to disallowance of expenditure and interest-free loans to a sister concern.

What were the issues?

Whether the ITAT was justified in deleting additions made under Section 14A regarding expenditure and under Section 40A(2) regarding interest-free loans to a sister concern.

Which sections of the Income-tax Act were involved?

Section 14A,Section 40A(2)

AI-generated summary — verify with the full judgment below

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.555/2016 C/W I.T.A.No.556/2016

BETWEEN:

1.

The Pr. Commissioner of Income-Tax, CIT(A)

5th floor, BMTC Building, 80 feet road, Kormangala,

Bangalore-560095.

2.

The Asst. Commissioner of Income-Tax,

Circle-11(5), Present address

Circle-4(1)(1),

2nd floor, BMTC Building,

80 feet road, Kormangala,

Bangalore-560095.

… APPELLANTS (COMMON) (By Sri K.V.Aravind, Adv.)

AND:

M/s. KBD Sugars & Distilleries Ltd., No.17, Sankey Road, Bangalore-560020.

… RESPONDENT (COMMON) (By Sri V.Chandrashekar, for Sri M.Lava, Adv.)

ITA No.555/2016 is filed under Section 260-A of the Income Tax Act 1961, praying to set aside the orders passed by the ITAT, Bangalore, in ITA No.408/Bang/2014 dated 05.02.2016 and confirm the order of the Appellate Commissioner confirming the order passed by the Assistant Commissioner of Income Tax, Circle-4(1)(1), Bengaluru.

ITA No.556/2016 is filed under Section 260-A of the Income Tax Act 1961, praying to set aside the orders passed by the ITAT, Bangalore, in ITA No.505/Bang/2014 dated 05.02.2016 and confirming the order of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income Tax, Circle-4(1)(1), Bengaluru.

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

JUDGMENT

1.

These appeals are admitted to consider the following substantial question of law. 1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made under Section 14A r/w/s 8D(2)(ii) and (iii) holding that there was no fresh investment and the assessing authority has not expressed or recorded any satisfaction by identifying the expenditure which has been incurred in contravention to the provisions in Section 14A and also contrary to the Board's Circular No.14 of the 2001 and 5 of 2001?"

2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made under Section 40A(2) of the Act by holding that there is no reason to interfere with the findings of the CIT(A) that the assessee is having its own free fund which is sufficient for advance the interest free loan to the sister concern event though the assessee has diverted the funds which has been established by the assessing authority?

2.

Re: substantial question of law no.1: The said substantial question of law having been considered and answered in favour of the assessee and against the revenue in the case of CIT VS M/S. QUEST GLOBAL ENGINEERING SERVICE PVT. LTD., in ITA No.133/2015 dated 15.02.2021, the said substantial question of law is answered in favour of the assessee and against the revenue.

3.

Re: substantial question of law no.2: The aforesaid issue being covered by the decision rendered by this Court in the case of CIT VS M/S. KBD SUGARS & DISTILLERIES LTD., in ITA No.170/2014 dated

14.12.2021, the said substantial question of law is answered in favour of the assessee and against the revenue.

Resultantly, the appeal stands dismissed.

Sd/- JUDGE

Sd/- JUDGE KK

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