The Pr Commissioner Of Income Tax vs. M/S Gopalan Enterprises

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ITA/626/2023HC KarnatakaKAHC01053568202326 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
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What did the High Court hold?

The High Court disposed of the appeal with liberty to the revenue to revive it if it falls within exceptions to a CBDT circular regarding monetary limits for appeals. The substantial questions of law were kept open for future adjudication.

What were the facts?

The Revenue filed an appeal under Section 260-A of the Income Tax Act against an order of the Income Tax Appellate Tribunal. The appeal was admitted on substantial questions of law concerning adjustments to book profits under Section 115JC and the applicability of Section 154.

What were the issues?

Whether the Tribunal's order was perverse in holding that adjustments to book profits under Section 115JC were debatable and thus Section 154 was not applicable. The applicability of Section 115JC regarding deductions under Chapter VI-A was also questioned.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 115JC,Section 154

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:40537-DB ITA No. 626 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.626 OF 2023

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C R BUILDING, QUEEN'S ROAD, BENGALURU – 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -2(3) 3RD FLOOR, C R BUILDING, QUEEN'S ROAD, BENGALURU – 560 001.

…APPELLANTS

(BY SRI. DILIP.M, ADV. A/W SRI. RAVIRAJ.Y.V., ADV.)

AND:

M/S. GOPALAN ENTERPRISES NO.5, RICHMOND ROAD, RICHMOND TOWN, BENGALURU – 560 025 PAN: AABFG0682M …RESPONDENT

THIS ITA/INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 11/04/2023 PASSED IN ITA NO.96/BANG/2023, FOR THE ASSESSMENT YEAR 2017-2018 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ETC.

THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40537-DB ITA No. 626 of 2023

CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA

ORAL ORDER (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Though this appeal is listed for orders, the matter is taken up for disposal in view of Circular No.09/2024 dated 17.09.2024, wherein monetary value is raised to Rs.2 Crores for filing an appeal by the Revenue.

2.

Heard the learned counsel Sri. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for the appellants/Revenue.

3.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 11.04.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.96/Bang/2023 for the assessment year 2017-18.

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NC: 2024:KHC:40537-DB ITA No. 626 of 2023

4.

This

Court,

admitted the appeal on 31.10.2023 to consider the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the order passed by Tribunal is perverse in nature in holding that making adjustments to book profits under section 115JC is a debatable issue and as such Section 154 of the Act cannot be invoked as matter requires adjudication upon the issue in which debatable when by relying on the decision in the case of Mphasys Software services India Pvt.Ltd when facts are distinguishable?

2.

Whether on the facts and in the circumstances of the case, the order passed by Tribunal is perverse in nature in annulling the order passed under section 154 of the Act even though the conditions set out in section 154 are fully satisfied in present case?

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NC: 2024:KHC:40537-DB ITA No. 626 of 2023

3.

Whether on the facts and circumstances of the case, the Tribunal overlooked provisions of Section 115JC of the Act which says that the adjusted total income of the assesse shall be increased by deductions claimed if any, under any section (other than section 80P) included in Chapter VI-A under the heading 'C' -Deductions in respect of certain incomes?"

5.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

6.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under

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NC: 2024:KHC:40537-DB ITA No. 626 of 2023

the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

7.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

SMJ List No.: 3 Sl No.: 4

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