THE PR COMMISSIONER OF INCOME TAX CIT (A) vs. M/S BHARATH FRITZ WERNER LTD

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ITA/307/2022HC KarnatakaKAHC01027588202223 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal without adjudicating on the merits of the substantial questions of law. This was due to the tax effect being below the threshold stipulated in CBDT Circular No. 09/2024, which binds the revenue.

What were the facts?

The Revenue appealed against an ITAT order allowing deduction under Section 35(2AB) for scientific research expenditure. The primary issue was the assessee's failure to submit Form 3CL, a mandatory requirement for such deductions.

What were the issues?

Whether the Tribunal was right in allowing deduction under Section 35(2AB) when the assessee failed to submit the mandatory Form 3CL. The maintainability of the appeal itself due to low tax effect was also a key consideration.

Which sections of the Income-tax Act were involved?

Section 35(2AB),Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39426-DB ITA No. 307 of 2022

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. 307 OF 2022 BETWEEN:

1.

THE PR COMMISSIONER OF INCOME TAX CIT (A) 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU - 560 095

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 11(2) PRESENT ADDRESS ACIT CIRCLE - 1(1)(1) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU - 560 095 …APPELLANTS (BY SRI. RAVI RAJ Y V.,ADVOCATE A/W SRI. DILIP M, ADVOCATE)

AND:

M/S BHARATH FRITZ WERNER LTD NO.14, HMT FACTORY MAIN ROAD, PEENYA YESHWANTHPUR POST BENGALURU - 560 022 PAN. AAACB5723A …RESPONDENT

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGLAURU IN ITA NO.

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39426-DB ITA No. 307 of 2022

2046/BANG/2019 DATED 30/09/2021 FOR ASSESSMENT YEAR 2010- 2011 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU 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 Raviraj Y.V along with learned counsel Sri M.Dilip, for appellants/Revenue.

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 30.9.2021 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2046/Bang/2019 for the assessment year 2010-11, raising the following substantial questions of law: “1. Whether, on the facts and in the circumstances of the case and law, the Tribunal is right in law in allowing deduction under section 35(2AB) of the Act when the assessee has failed to submit Form 3CL

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NC: 2024:KHC:39426-DB ITA No. 307 of 2022

which qualifies the quantum of expenditure incurred on scientific research by Department of Scientific and Industrial Research (for short DSIR) and even when the DSIR has not issued Form 3CL due to failure of the assessee to satisfy the conditions for obtaining the same”?

2.

Whether, on the facts and in the circumstances of the case and law, the Tribunal’s order can be said as perverse in nature in holding that once Research and development fatality has been approved by the DSIR, the deduction under section 35(2AB) of the act has to be allowed without satisfying the other conditions laid down in said section and when the mandatory conditions set out in section 35(2AB) of the act are not satisfied?

3.

Whether on facts and in the circumstances of the case, the Tribunal is right in law in holding that assessee is entitled for deduction under section 35(2AB) even though the mandatory conditions are not satisfied by assessee and ignoring the findings of assessing authority?”

3.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the

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NC: 2024:KHC:39426-DB ITA No. 307 of 2022

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 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

ND List No.: 3 Sl No.: 36

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