M/S SRIDEVI DAIRY FARMS (P) LIMITED vs THE DEPUTY COMMISSIONER OF INCOME-TAX

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 23RD DAY OF NOVEMBER, 2021

PRESENT

THE HON’BLE MRS.JUSTICE S.SUJATHA

AND

THE HON’BLE MR. JUSTICE HANCHATE SANJEEVKUMAR

I.T.A.No.159/2012

BETWEEN :

M/s SRIDEVI DAIRY FARMS (P) LIMITED REP. BY ITS MANAGING DIRECTOR SRI D.NARASIMHALU NAIDU @ D.N.NAIDU, NO.356, 24TH B CROSS, 9TH MAIN, II STAGE, BANASHANKARI, BANGALORE-560070

...APPELLANT

(BY SRI A.SHANKAR, SENIOR COUNSEL A/W SRI M.LAVA, ADV.)

AND :

THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1), C.R.BUILDING, QUEENS ROAD, BANGALORE – 560001

…RESPONDENT

(BY SRI E.I.SANMATHI, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20.01.2012 PASSED IN ITA No.1095/BANG/2010, FOR THE ASSESSMENT YEAR 2004-2005, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE

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FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE TRIBUNAL IN ITA No.1095/BANG/2010 DATED 20.01.2012 REFERRED AS ANNEXURE-A.

THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 (‘Act’ for short) challenging the common order dated 20.01.2012 passed in ITA Nos.1093 to 1095/Bang/2010 by the Income Tax Appellate Tribunal, Bengaluru Bench ‘B’ (‘Tribunal’ for short) relating to the assessment year 2004-05.

The other connected matters arising out of the common order dated 20.01.2012 impugned herein have been disposed of in ITA Nos.157/2012 and 158/2012 in terms of the memo filed by the assessee, as withdrawn. Though the appeals were originally admitted to consider the substantial questions of law as raised by the assessee in the common memorandum of

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appeal relating to the assessment years 2002-03 to 2004-05, in view of the disposal of the appeals relating to the assessment years 2002-03 and 2003-04 as aforesaid, the substantial questions of law which arise for our consideration in the present appeal are as under:- 1. Without prejudice, whether the Tribunal was justified in law in not holding that once the interest claimed by the appellant for the assessment year 2002-03 and 2003-04 is disallowed the appellant is entitled to claim 1/5th of the interest in the assessment year 2004-05 being the income offered under the head income from house property as a pre-construction period interest allowable as deduction as per Explanation to section 24 of the Act on the facts and circumstances of the case? 2. Whether the Tribunal was justified in law in holding that the appellant cannot agitate the issue of claim of 1/5th of interest as allowable deduction in the

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proceedings under section 143(3) read with section 153A of the Act, when the issue has arises on account of disallowance in earlier year 153A proceedings? 3. Whether the jurisdiction assumed by the Assessing Officer under Section 153A is valid in law more so when the addition made by the learned Assessing Officer does not arise out of search material, on the facts and circumstances of the case?

Learned Senior Counsel Sri. A. Shankar representing the assessee would submit that the substantial question of law No.3 has been squarely covered by the recent ruling of this Court dated 29.09.2021 in ITA No.322/2018 and connected matters.

Learned counsel Sri. E.I. Sanmathi for the Revenue could not dispute the same insofar as the maintainability of the proceedings under Section 153A of the Act prima-facie in the absence of the incriminating material, however, submits that the

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matter requires a remand to the Tribunal to examine on this aspect with reference to the aforesaid ruling referred to by the learned Senior counsel for the assessee.

We have heard the learned counsel appearing for the parties and perused the material on record.

The co-ordinate bench of this Court (where one of us, Hon’ble SSJ was a member) in ITA No.322/2018 and connected matters (D.D. 29.09.2021) (Principal Commissioner of Income Tax and another vs. M/s. Delhi International Airport Private Limited) had the occasion to adjudicate upon the scope of Section 153A of the Act and its effect. Considering the relevant judgments holding the field vis-à-vis the provisions of the Act, the substantial questions of law relating to Section 153A of the Act raised therein have been answered in favour of the

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assessee and against the Revenue.

In such circumstances, the question of law No.3 in this appeal certainly requires re-consideration by the Tribunal. Accordingly, we direct the Tribunal to re-consider the matter in the light of the ruling of this Court in M/s. Delhi International Airport Private Limited, supra and decide the matter afresh in accordance with law.

However, we make it clear that the Tribunal shall adjudicate upon the other issues involved in the appeal, in the event, the issue is answered in favour of the Revenue inasmuch as this question is concerned, i.e., the maintainability or invoking of Section 153A of the Act with reference to the incriminating material. In such an event, the parties are at liberty to urge all contentions on the merits of the case. Thus, all the rights and contentions of the parties are left open to be adjudicated before the Tribunal on merits.

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With the aforesaid observations and directions, the appeal stands disposed of sans answering the substantial questions of law.

Sd/- JUDGE

PMR

M/S SRIDEVI DAIRY FARMS (P) LIMITED vs. THE DEPUTY COMMISSIONER OF INCOME-TAX