THE PR.COMMISSIONER OF INCOME TAX CIT(A) vs. AMBUTHIRTHA POWER PVT LTD

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ITA/142/2020HC KarnatakaKAHC01024390202006 February 2023Bench: P.S.DINESH KUMAR,RAMACHANDRA D. HUDDAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The substantial questions of law were answered in favour of the assessee and against the Revenue.

What were the facts?

The Revenue appealed against the ITAT's order which set aside the disallowance made under Section 14A read with Rule 8D. The disallowance was made on the grounds that the assessee did not have exempt income to invoke these provisions.

What were the issues?

Whether Section 14A read with Rule 8D can be invoked when the assessee has not earned exempt income in a particular year, and whether CBDT Circular No. 5 of 2014 is applicable.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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ITA No. 142 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. 142 OF 2020 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CIT(A), 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANAGALA BENGALURU-560 095 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1)(1) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095 …APPELLANTS (BY SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL) AND: AMBUTHIRTHA POWER PVT LTD #37, RMJ MANDOTH TOWERS 7TH CROSS, VASANTH NAGAR BENGALURU-560 052 PAN: AACCA 9267G …RESPONDENT

(BY MS. TANMAYEE RAJKUMAR, ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 06.02.2020 PASSED IN ITA NO.2324/BANG/2019, FOR THE ASSESSMENT YEAR 2016-2017 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,

Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA

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ITA No. 142 of 2020

BENGALURU IN ITA NO.2324/BANG/2019 DATED 06.02.2020 FOR ASSESSMENT YEAR 2016-2017 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 ADMISSION, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

JUDGMENT

Ms.Tanmayee Rajkumar, learned advocate accepts notice for the respondent. 2. This appeal by the Revenue challenging the order dated 06.02.2020 in ITA No.2324/Bang/2019 passed by the ITAT1, "C" Bench, Bangalore, has been admitted to consider the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance of Rs.2,95,61,114 made under section 14A of the Act read with Rule 8D by holding that assessee do not have exempt income to invoke said provisions without appreciating that it is not necessary that assessee should have earned exempt income by way of dividend and when parameters of invoking said provision has been satisfied in the case of assessee?

2.

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance made

1 Income tax Appellate Tribunal, Bengaluru Bench

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ITA No. 142 of 2020

under section 14A read with Rule 8D Tribunal by ignoring CBDT Circular No.5 of 2014 dated 11/12/2014 wherein it is laid down that disallowance under section 14A read with Rule 8D can be made even when a taxpayer in a particular year has not earned exempt income?

3.

Heard Shri K.V.Aravind, learned Senior Standing Counsel for the appellants-Revenue and Ms.Tanmayee Rajkumar, learned Advocate for the respondent-Assessee.

4.

At the outset, Ms.Tanmayee Rajkumar 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 questions of law in assessee’s favour.

5.

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

6.

In view of the above, the following:

2 ITA No.133/2015 DD 15.02.2021

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ITA No. 142 of 2020

ORDER

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

Ms.Tanmayee Rajkumar is permitted to file vakalath for the respondent in four weeks. No costs.

Sd/- JUDGE

Sd/- JUDGE

YN List No.: 1 Sl No.: 67

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