THE PR. COMMISSIONER OF INCOME TAX CIT (A) vs. M/S AXISCADES AEROSPACE AND TECHNOLOGIES PVT LTD

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ITA/69/2020HC KarnatakaKAHC01000207202006 February 2023Bench: P.S.DINESH KUMAR,RAMACHANDRA D. HUDDAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the disallowance under Section 14A cannot be made if there is no exempt income earned in the relevant assessment year. The substantial question of law was answered in favour of the assessee.

What were the facts?

The Revenue appealed against an ITAT order that confirmed the disallowance of expenses under Section 14A only if exempt income was earned. The assessee argued that the issue was covered by a previous High Court decision.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempt income is earned in the assessment year.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENGALURU IN

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ITA No. 69 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF FEBRUARY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR INCOME TAX APPEAL NO. 69 OF 2020

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX, CIT(A) 5TH FLOOR, BMTC BUILIDNG 80 FEET ROAD, KORAMANGALA BENGALURU - 560 095. 2. THE INCOME TAX OFFICER WARD-1(1)(1) PRESENT ADDRESS DCIT, CIRCLE-1(1)(1) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU - 560 095. …APPELLANTS (BY SHRI. M. DILIP, STANDING COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL)

AND:

M/s. AXISCADES AEROSPACE AND TECHNOLOGIES PVT. LTD. NO.54, JUPITER INNOVATION CENTER RICHMOND ROAD BENGALURU - 560 025. PAN: AACCB 1728K. …RESPONDENT (BY SMT. SHEETAL BORKAR, ADVOCATE)

Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA

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ITA No. 69 of 2020

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 05/07/2019 PASSED IN ITA NO. 529/BANG/2019, FOR THE ASSESSMENT YEAR 2014-2015, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 529/BANG/2019 DATED: 05/07/2019 FOR ASSESSMENT YEAR 2014-2015 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU AND ETC.

THIS ITA, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

JUDGMENT

Smt.Sheetal Borkar, learned advocate accepts notice for the respondent. 2. This appeal by the Revenue challenging the order dated 05.07.2019 in ITA No.529/Bang/2019 passed by the ITAT1, "C" Bench, Bangalore, has been admitted to consider the following question of law: “Whether on the facts and in the circumstances on the case, the Tribunal is right in holding that disallowance under section 14A of the Act cannot be made if there is no exempt income earned in the relevant assessment year ignoring

1 Income tax Appellate Tribunal, Bengaluru Bench

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ITA No. 69 of 2020

that section 14A of the Act and Rule 8D which provides for disallowance of expenses in relation to income not “includible” in total income when expenditure incurred/apportionable to any investment which is going to earn any exempt income either in that financial year or any other financial year is liable for disallowance under said section and Rule framed thereunder?”

3.

Heard Shri. M. Dilip, learned Standing Counsel for the appellants-Revenue and Smt.Sheetal Borkar, learned Advocate for the respondent-Assessee.

4.

At the outset, Smt.Sheetal Borkar submits that issue involved in this appeal is covered by the decision of this Court in The Commissioner of Income Tax and another Vs. M/s. Quest Global Engineering Services Pvt. Ltd.,2 holding the question of law in assessee’s favour.

5.

The said submission is not disputed by Shri Dilip, in his usual fairness.

2 ITA No.133/2015 DD 15.02.2021

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ITA No. 69 of 2020

6.

In view of the above, the following:

ORDER

(i) Appeal is dismissed; (ii) The substantial question of law is answered in favour of the Assessee and against the Revenue.

Smt.Sheetal Borkar is permitted to file vakalath for the respondent within four weeks. No costs.

Sd/- JUDGE

Sd/- JUDGE

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