PRINCIPAL COMMISSIONER vs. M/S DELTA INFRALOGISTICS

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ITA/609/2019HC KarnatakaKAHC01029195201923 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal based on a CBDT circular regarding tax effect thresholds. The court granted the Revenue liberty to revive the appeal if exceptions applied, keeping the questions of law open.

What were the facts?

The Revenue appealed against an ITAT order that set aside disallowances made on 'speed money' and 'Tipper Mammol' expenses. The Revenue argued these were not genuine business expenditures and the assessee failed to discharge the onus of proof.

What were the issues?

Whether 'speed money' and 'Tipper Mammol' expenses are allowable business expenditures under Section 37(1) and if the assessee discharged the onus of proof. The appeal was also considered in light of CBDT circulars on tax effect.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39246-DB ITA No. 609 of 2019

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD 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. 609 OF 2019 BETWEEN:

1.

PRINCIPAL COMMISSIONER OF INCOME TAX (MANGALORE) C.R.BUILDING, ATTAVARA, MANGALORE 575001.

2.

ASSISTANT COMMISSIONER INCOME TAX CIRCLE - (1), MANGALORE 575001. ...APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE)

AND:

M/S DELTA INFRALOGISTICS (WORLDWIDE) LTD., (FORMERLY HML AGENCIES PVT. LTD.,) NO.202, VEEKAY TOWERS, KULUR BANGRA ROAD, KULUR, MANGALORE 575001 PAN- AAACH7083 B ...RESPONDENT (BY SRI. ANNAMALAI, AND LAVA M.,ADVOCATES)

THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 08.05.2019 PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BENGALURU IN ITA. No.774/BANG/2012 (ANNEXURE-A) FOR ASSESSMENT YEAR 2006-2007 AS SOUGHT FOR IN THIS APPEAL, AND TO GRANT SUCH OTHER RELIEF AS

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39246-DB ITA No. 609 of 2019

DEEMED FIT, IN THE INTEREST OF JUSTICE AND ETC.,

THIS APPEAL, COMING ON FOR FINAL HEARING, 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 Sri Annamalai and Sri Lava M., learned counsels for the 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 08.05.2019 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.774/Bang/2012 for the assessment year 2006-07, raising the following substantial questions of law: “1. Whether under the facts and circumstances of the case, the Tribunal is

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NC: 2024:KHC:39246-DB ITA No. 609 of 2019

right in law in setting aside the disallowance made in respect of speed money expenditure even though said expenditure

even though said expenditure is of such nature which cannot be considered to be allowable under Section 37(1) of the Income Tax Act, 1961 and when the onus to prove the genuineness of expenditure claimed has not been discharged by the assessee?

2.

Whether under the facts and circumstances of the case, the Tribunal is right in law in setting

aside the disallowance of expenses made by assessing authority under section 37(1) of the Act in respect of Tipper Mammol even when the assessing authority rightly made addition by holding that the said expenses are in nature of illegal gratifications and not genuine business expenditure?

3.

Whether on the facts and in the circumstances of the case, the Tribunal’s order can be considered as perverse in nature as it has been held by Tribunal that illegal payments were not made to the

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NC: 2024:KHC:39246-DB ITA No. 609 of 2019

port officials ignoring the evidences seized during the course of search operations and the statements recorded during the course of search?

3.

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.

4.

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.

5.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned

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NC: 2024:KHC:39246-DB ITA No. 609 of 2019

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

BS List No.: 1 Sl No.: 0

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