PRINCIPAL COMMISSIONER OF INCOME TAX - 4 vs. M/S EPSILON ADVISORS PVT LTD

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ITA/319/2019HC KarnatakaKAHC01013431201911 February 2025Bench: KRISHNA S DIXIT,G BASAVARAJA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court found that the substantial questions of law framed by the Revenue did not arise for consideration. Furthermore, the amount involved in the case fell below the minimum ceiling limit prescribed by CBDT Circular No. 9/2024.

What were the facts?

The Revenue appealed an ITAT order that partly allowed the assessee's quantum appeal and dismissed the Revenue's quantum appeal and penalty appeal. The appeal questioned the calculation of capital gains on share sales and the allowance of advisory fees.

What were the issues?

Whether the ITAT order was perverse in setting aside additions on account of advisory fees and whether the questions of law framed by the Revenue were substantial and arose for consideration.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

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NC: 2025:KHC:6016-DB ITA No. 319 of 2019

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 319 OF 2019 BETWEEN:

1.

PRINCIPAL COMMISSIOENR OF INCOME TAX - 4 BMTC COMPLEX, KORAMANGALA, BENGALURU.

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(1)(1), BMTC COMPLEX, KORAMANGALA, BENGLAURU. …APPELLANTS (BY SRI. SANMATHI E. I., ADVOCATE) AND:

M/S EPSILON ADVISORS PVT LTD NO. 642, 4TH MAIN, 2ND STAGE, INDIRANGAR, BANGALORE 38. PAN: AAACE4111H …RESPONDENT (BY SRI. NARENDRA KUMAR J. JAIN., ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961 IS ARISING OUT OF ORDER DATED 29.11.2018 PASSED IN ITA NO.1607/BANG/2014 (ANNEXURE- A) FOR ASSESSMENT YEAR 2006-2007, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER

Digitally signed by LAKSHMINARAYAN N Location: High Court of Karnataka

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NC: 2025:KHC:6016-DB ITA No. 319 of 2019

QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 29.11.2018 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. ITA NO. 1607/BANG/2014 (ANNEXURE-A) FOR THE ASSESSMENT YEAR 2006-2007 AS SOUGHT FOR IN THIS APPEAL.

THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE G BASAVARAJA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

This appeal by the Revenue seeks to call in question the ITAT Order dated 29th November, 2018 passed in ITAT No. 1607/BANG/2014, whereby the relief has been accorded to the Assessee with the following:

"In the combined result, Quantum appeal of the assessee is partly allowed in the terms indicated above and the quantum appeal of the revenue is dismissed and penalty appeal of the assessee is allowed and penalty appeal of the revenue is dismissed."

2.

The Revenue has framed the following substantial questions of law in the appeal memo: "1. Whether on the facts and circumstances of the case, the Tribu7nal is correct in giving a finding that the loss on shares of M/s. BPL Communication Ltd. kin A.Y.2003-04 calculated

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NC: 2025:KHC:6016-DB ITA No. 319 of 2019

on pro-rata basis will be part of actual cost of the share, to be deducted from the sale proceeds? 2. Whether on the facts and circumstances of the case, the Tribunal is correct in allowing the calculation of long term capital gain in sale of share of Rs.40,88,08,542/- by taking the actual cost as Rs.24,61,98,742/-? 3. Whether on the facts and circumstances of the case, the Tribunal has failed to appreciate that the assessee has managed the above loss of Rs.117 Cr. in trading of shares of M/s. JCPL just to set off the capital gain of Rs.101 Cr. earned by the company in selling the shares of M/s. BPL Communication Ltd.? 4. Whether on the facts and circumstances of the case, the Tribunal is correct in dismissing the appeal of the Revenue by relying on the decision of High Court of Karnataka in the case of M/S. Manjunatha Cotton and Ginning Factory 359 ITR 565 which has been accepted by the department due to low tax effect?"

3.

A perusal of the above questions in the fact matrix of the case shows that they do not arise for consideration in this case. Learned Panel Counsel appearing for the Revenue has filed a Memo raising additional substantial question of law, which reads as under:

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NC: 2025:KHC:6016-DB ITA No. 319 of 2019

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in setting aside the addition made on account of advisory fee by holding that claim on basis of number of shares sold as against sale consideration and ignoring the remand report filed by Assessing Officer relating to determination of eligibility of claiming advisory fee"?

5.

Since the amount involved in the case falls below the minimum ceiling limit prescribed in the CBDT Circular No.9/2024, the appeal is not maintainable and accordingly it is disposed off reserving liberty to raise the above substantial question of law in appropriate proceedings.

Sd/- (KRISHNA S DIXIT) JUDGE

Sd/- (G BASAVARAJA) JUDGE

lnn List No.: 1 Sl No.: 30

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