COMMISSIONER OF INCOME TAX vs. SHRI. VIKRAM REDDY(HUF)

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF FEBRUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.292 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX

C.R. BUILDINGS-III

QUEENS ROAD

BANGALORE-560001. 2. ASSISTANT COMMISSIONER OF

INCOME TAX, CIRCLE-1(1)

ITO WARD 1(2), BANGALORE. ... APPELLANTS (BY SRI. E.R. INDRAKUMAR, SR. COUNSEL A/W SRI. E.I. SANMATHI, ADV.,) AND: SHRI. VIKRAM REDDY (HUF) NO.6A, REGENCY HEIGHTS 3/2-1, CLEAVELAND ROAD FRAZER TOWN, BANGALORE-560005. ... RESPONDENT (BY SRI. ASHOK A. KULKARNI, ADV.) - - -

2 THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.02.2013 PASSED IN ITA NO.159/BANG/2011, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (ii) SET ASIDE THE APPELLATE ORDER OF THE ITAT, 'A' BENCH, BANGALORE IN APPEAL PROCEEDINGS ITA NO.159/BANG/2011 DATED 8.2.2013, AS SOUGHT FOR IN THIS APPEAL. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court vide order dated 13.08.2013 on the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal is correct in law in not recognizing the colourable device employed by the assessee as envisaged

3 by the Hon'ble Apex Court in case of McDowell & Co Ltd (reported in 158 ITR page 148) which resulted in massive tax evasion in the guise of tax planning laced with multi layered transactions?". "(ii) Whether on the facts and circumstances of the case, the Tribunal is correct in law in not considering the fact that the shares belonging to the assessee were ultimately transferred to Godrej Group as part of sale of business of the Nutrine Group to Godgrej Group, routed through a series of transactions including the reconstitution of the defunt firm M/s. B.V. Reddy Enterprises to accommodate the shareholders of M/s. Nutrine Confectionery Co. P. Ltd and guising the numerous transactions as genuine in quick span of time, with a sheer motive of avoidance of payment of actual capital gain?". "(iii) Whether on the facts and circumstances of the case, the Tribunal is correct in law in holding that the entire series of transactions by which the shares of NCCPL were ultimately transferred to GBFL were all valid and such an arrangement to avoid

4 payment of taxes on account of correct quantum of capital gain that would result on transfer of shares of NCCPL to GBFL was permitted and within the framework of law?". "(iv) Whether in the given facts and circumstances of the case, the Tribunal is correct in law in holding that the entire series of transactions by which the shares of Nutrine Confectionary Co. P Ltd were ultimately transferred to GBFL were all valid and such a course was permitted and within the frame work of law and that the transaction was not colourable or dubious device or subterfuge and were legal and valid without completely appreciating the complete though process and motive behind the series of transactions entered in to by the assessee and family members?". 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.291/13, the substantial question of law framed by a bench of this court is answered against the revenue and in favour of

5 the assessee. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss