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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF SEPTEMBER, 2021
PRESENT
THE HON’BLE MRS. JUSTICE S. SUJATHA AND
THE HON’BLE MR. JUSTICE RAVI V. HOSMANI
I.T.A. NO.191/2021
BETWEEN:
PR. COMMISSIONER OF INCOME TAX, BMTC COMPLEX, KORAMANGALA, BENGALURU.
THE INCOME TAX OFFICER, WARD-5(1)(2), BMTC COMPLEX, KORMANGALA, BENGLAURU.
…APPELLANTS
(BY SRI. E.I. SANMATHI, ADVOCATE)
AND:
M/S. ORION PROPERTY MANAGEMENT SERVICES LTD., NO.26/1, 30TH FLOOR, BRIGADE GATEWAY, WORLD TRADE CENTRE, DR. RAJKUMAR ROAD, MALLESHWARAM, RAJAJINAGAR, BENGALURU -560 055. PAN: AABCO5307J
… RESPONDENT
(BY SRI. SUDHEENDRA, B.R., ADVOCATE)
THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME-TAX ACT, 1961, ARISING OUT OF ORDER DATED 14.09.2020 PASSED IN ITA NO.677/BANG/2018 FOR THE ASSESSMENT YEAR 2014-2015.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S.SUJATHA J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’ for short) against the order of the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short ‘Tribunal’) in ITA No.677/BANG/2018 relating to the Assessment Year 2014-15 raising the following Substantial questions of Law: (1) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing relief to assessee on the basis of fresh materials brought on record before Tribunal without affording opportunity to assessing authority to file remand report nor considering request of Revenue to remand the matter for verification of fresh evidences brought on record by assessee before Tribunal?
(2) Whether on the facts and in the circumstances of the case and in law, is perverse in nature as Tribunal has set aside the disallowances made by
assessing authority by relying on fresh materials brought on record by assessee for first time before Tribunal when assessing authority had rightly made disallowances on the basis of available materials on record at time of assessment and without affording opportunity for verification of new materials?
The assessee is a company, filed its return of income for the year 2014-15 by declaring total income of Rs.1,71,039/-. The company is engaged in the business of Mall Management.
The case of the assessee was selected for scrutiny and order under Section 143(3) of the Act was passed. Learned Assessing Officer on verification of 26AS reconciliation statement had observed that assessee did not credit sum of Rs.35,85,414/- to P&L Account, as security charge reimbursed from M/s. Brigade (holding company). Thus, Assessing Officer disallowed sum of Rs.35,85,414/- as the said amount escaped assessment. Further, it was observed that the
assessee failed to credit Rs.4,71,90,356/- as HV AC charges to P&L A/c. No documentary evidence was placed to prove claim of reducing from respective expenses. Being aggrieved, the assessee preferred appeal before CIT(A) who upheld the observations of Assessing Officer against which an appeal was preferred before the Tribunal. The Tribunal has considered the material evidence on record and allowed the appeal of the assessee on the question of law raised pursuant to the grounds considered by the Tribunal therein. Being aggrieved, the Revenue has preferred this appeal.
Learned counsel for the Revenue argued that it was mandatory for the Tribunal to remand the matter to the Assessing Authority since, no documentary evidence was placed either before the Assessing Officer or before the CIT(A) regarding the reimbursement of expenses, the details of which was placed before the Tribunal for the first time. Without getting the remand report from the Assessing Officer, the Tribunal proceeded to decide the issue which is wholly
unjustifiable. Thus, learned counsel seeks to answer the substantial questions of law in favour of the Revenue.
Learned counsel for the assessee submitted that the assessee being engaged in the business of Mall Management, reimbursement received from the tenants indeed was credited to the related expenses incurred and the same was made available before the Assessing Officer in assessment proceedings as well as on the rectification under Section 154 proceedings. The Assessing Officer failed to appreciate the same. On further appeal before the CIT(A), though the First Appellate Authority observed that breakup of marketing cost reveals a sum of Rs.48,39,860/- stands reduced from marketing income observing that from the P&L A/c that the net expenses have been charged for the reimbursement, as per ledger account of tenants in the books of the appellant, proceeded to reject the appeal holding that no cogent evidence was placed for having received reimbursement towards expenses incurred under the heads fuel, security and marketing.
Learned counsel argued that the Tribunal being the last fact finding authority meticulously examined the materials placed on record and allowed the appeal filed by the assessee. No perversity or infirmity could be found in the orders impugned. Accordingly, prayed for dismissal of the appeal, answering substantial questions of law in favour of the assessee and against the Revenue.
We have carefully considered the rival submissions of the learned counsel appearing for both the parties and perused the material on record.
It is not in dispute that the assessee has furnished the breakup figures of the amount said to have been received from the tenants, which indeed was considered by the Tribunal and a finding has been recorded by the Tribunal at paragraphs 10.5 and 12.1 as under: “10.5. From relevant pages relied by Ld.AR, it appears that, said amount was considered while computing expenses under the head, ‘Marketing Cost’ before debiting it to P&L account. Ld.CIT(A) in para 5.3 of his order, notes that, clarification was provided by
assessee in rectification petition under 154 of the Act before Ld.AO, regarding entries in P&L account.”
“12.1. Ld. AR. Submitted that, reimbursement is credited to related expenses incurred, and net expenses are considered in statement of P&L account as expenditure. The Ld.AR submitted that, sum of Rs.14,12,12,74/- was incurred towards HVAC/power charges, against which, assessee received sum of Rs.4,21,83,036/-, as reimbursement from tenants. Referring to page 48, Ld.AR submitted that, under the head, ‘Direct expenses’ at page 32 (P&L account), the said sum forms part of ‘Power & Fuel’, reflected in Note 21 at page 48. referring to page 242-260 of paper book, Ld.AR submitted that, Ledger account is maintained by assessee for HVAC/Power charges received. He submitted that, at page 260, net of reimbursement received towards HVAC/power charges have been calculated as Rs.3,40,99,538/- that is debited to ‘power and fuel’ in Note 21 under the head, ‘Direct Expense’.”
The primary challenge of the Revenue is that no opportunity was provided to the Assessing Officer to examine the material evidence furnished before the Tribunal for the first time. This argument does not holds water for the reason that it was admitted by the CIT(A) as well, that the assessee has provided clarification in rectification proceedings under Section 154 of the Act before the Assessing Officer which came
to be disposed of. If such material evidence was placed before the Assessing Officer even in the proceedings under Section 154 of the Act, regarding entries in P&L A/c, the same being available, CIT(A) under hyper technicalities ought not to have confirmed the addition of Rs.4,71,90,356/- on the premise that no documentary evidence was placed to substantiate the same.
It is trite that the Tribunal is the last fact finding authority, irrespective of the material evidence examined by the authorities, the Tribunal is equally competent to examine the material evidence placed before it. Having considered the breakup figures available in the P&L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. It is apt to refer the judgment of Co-ordinate Bench of this Court
(one of us SSJ was a member) in Principal Commissioner of Income Tax, Bengaluru Vs. Soft Brands India (P) Ltd., reported in (2018) 406 ITR 513 (Karnataka) wherein it has been held that the finding of the Tribunal being one of the fact which has not been shown to be perverse, that unless the perversity in the finding of the fact is established before the High Court, no Substantial Questions of law arises for consideration under Section 260(A) of the Act.
In view of the aforesaid, we find no perversity or irregularity in the order impugned. No substantial questions of law arise for our consideration.
Accordingly, appeal stands dismissed.
Sd/- JUDGE
Sd/- JUDGE
BVK