PR. COMMISSIONER OF INCOME TAX-VI vs. M/S STANLEY

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ITA/527/2016HC KarnatakaKAHC01049716201624 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal based on a CBDT circular regarding tax effect. The court granted the Revenue liberty to revive the appeal if exceptions under the circular applied, keeping the substantial question of law open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order that set aside the disallowance of a warranty provision. The Revenue argued that the ITAT failed to consider a Supreme Court judgment and that the assessee, in its second year of operation, lacked reliable historical data for estimating warranty obligations.

What were the issues?

Whether the ITAT was correct in setting aside the disallowance of warranty provision without considering relevant Supreme Court judgments and the assessee's operational history. The appeal was also considered in light of the tax effect and CBDT circulars.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39936-DB ITA No. 527 of 2016

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH 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. 527 OF 2016 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-VI BMTC COMPLEX KORMANGALA, BANGALORE.

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-6(1)(2), BENGALURU. …APPELLANTS (BY SRI.SANMATHI E.I., ADV.)

AND: M/S. STANLEY BLACK AND DECKER INDIA LTD., NO.28, ‘AKEPMS’, 3RD MAIN 1ST CROSS, ASHWINI LAYOUT KORAMANGALA INTERMEDIATE RING ROAD BENGALURU-560 047 PAN: AAACB4681R. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADV.)

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 07/03/2016 PASSED IN ITA NO.518/BANG/2015, FOR THE ASSESSMENT YEAR 2010-2011, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT & SET ASIDE THE APPELLATE ORDERS DATED 07/03/2016 THE ITAT, 'A' BENCH, BENGALURU, IN ITA NO.518/BANG/2015 FOR ASSESSMENT YEAR 2010-11 AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39936-DB ITA No. 527 of 2016

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

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

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

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for respondent/assessee.

2.

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 07.03.2016 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.518/Bang/2015 for the assessment year 2010-11.

3.

This

Court,

admitted the appeal on 31.10.2017 to consider the following substantial question of law:

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NC: 2024:KHC:39936-DB ITA No. 527 of 2016

“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance of warranty provision of Rs.1,29,27,237/- even without considering the judgment of the Hon'ble Supreme Court in the case of Rotork Controls Pvt. Ltd., v/s. CIT (reported in 314 ITR page 62) and even when it being the second year of operation for the assessee company no reliable historical trend can be traced out for estimating the obligation?”

4.

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.

5.

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

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NC: 2024:KHC:39936-DB ITA No. 527 of 2016

6.

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

MPK CT:bms List No.: 2 Sl No.: 11

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