PR.COMMISSIONER OF INCOME TAX-3 vs. M/S ITTIAM SYSTEMS PVT LTD.

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ITA/152/2022HC KarnatakaKAHC01007695202224 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 thresholds. The court granted the revenue liberty to revive the appeal if exceptions under the circular apply, keeping the substantial questions of law open for future adjudication.

What were the facts?

The Revenue is in appeal against an ITAT order concerning the assessee's claim for Foreign Tax Credit (FTC) in respect of USA, Japan, and Germany for AY 2014-15. The appeal was admitted on substantial questions of law regarding the Tribunal's decision on FTC eligibility and the applicability of Section 90 of the Income Tax Act.

What were the issues?

Whether the Tribunal was correct in allowing the assessee's claim for Foreign Tax Credit, and if the Tribunal's order was perverse in holding the assessee eligible for the full claim under Section 90 of the Act.

Which sections of the Income-tax Act were involved?

Section 90,Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39761-DB ITA No. 152 of 2022

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. 152 OF 2022 BETWEEN:

1.

PR.COMMISSIONER OF INCOME TAX-3, BMTC COMPLEX, KORAMANGALA, BANGALORE.

2.

INCOME TAX OFFICER, WARD -3 (1) (2) BMTC COMPLEX, KORAMANGALA 6TH BLOCK, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE)

AND:

1.

M/S ITTIAM SYSTEMS PVT LTD., NO 01, CONSULATE 1 RICHMOND ROAD, BENGALURU - 560025, PAN AAAC17628B. …RESPONDENT

(BY SMT TANMAYEE RAJKUMAR, ADVOCATE)

THE APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 13/01/2021 PASSED IN ITA NO.2465/BANG/2017, FOR THE ASSESSMENT YEAR 2014-2015 PRAYING THIS HON’BLE COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC.

THIS APPEAL, COMING ON FOR HEARING, 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:39761-DB ITA No. 152 of 2022

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 13.01.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2465/Bang/2017 for the assessment year 2014-15.

3.

This

Court,

admitted the appeal on 25.02.2022 to consider the following substantial question of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in

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NC: 2024:KHC:39761-DB ITA No. 152 of 2022

law in holding that the assessing authority is not right in restricting claim of assessee relating to Foreign Tax Credit in respect of USA, Japan and Germany even though assessee is not entitled for such claim as per section 90 of the Act coupled with provisions of respective Double Taxation Avoidance Agreement's (DTAA's) entered into by India?

2.

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in holding that assessee is eligible for full claim made under section 90 of the Act relating to FTC even when conditions set out in said section are not satisfied in case of assessee with respect of restricted amount/turnover and when decision relied upon by Tribunal has reached finality?”

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.

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NC: 2024:KHC:39761-DB ITA No. 152 of 2022

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.

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 List No.: 2 Sl No.: 37

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