THE COMMISSIONER OF INCOME TAX vs. M/S. JUPITAR CAPITAL (P) LTD.,

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ITA/396/2012HC KarnatakaKAHC01052315201210 November 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD6 pages
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What did the High Court hold?

The High Court modified the ITAT's order, directing the Assessing Officer to decide the remitted issue in accordance with the extant legal position, as agreed by both parties. The substantial questions of law were not addressed.

What were the facts?

The assessee, a non-banking financial institution, declared a total loss for AY 2007-08. The Assessing Officer determined a significant income, which was partly allowed by the CIT(A). The ITAT then remitted the matter back to the Assessing Officer for reconsideration.

What were the issues?

Whether the Tribunal correctly remitted the issue to the Assessing Officer without examining peculiar transactions, and whether interest paid on a loan used for share application money was disallowable under Section 14A.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 14A

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 10TH DAY OF NOVEMBER, 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.396 OF 2012

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX, C.R.BUILDING, QUEENS ROAD, BANGALORE.

2.

THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-11(5), C.R.BUILDING, QUEENS ROAD, BANGALORE. …APPELLANTS (BY SRI.K.V.ARAVIND, ADV.)

AND:

M/S. JUPITAR CAPITAL (P) LTD., NO.54, RICHMOND ROAD, BANGALORE-560 025. …RESPONDENT (BY SRI.MAHESH CHOWDHARY, ADV. FOR SMT.SOUWMYA SRIDHAR, ADV.) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED

18/07/2012 PASSED IN ITA NO.961/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN ITA NO.961/BANG/2011 DATED 18/07/2012 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE- 11(5), BANGALORE.

THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT

This appeal under Section 260-A 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 04.02.2013 on the following substantial questions of law:

‘1. Whether the Tribunal was correct in setting aside and remitting the issue to the file of the Assessing Officer to reconsider in accordance with the

guidelines laid down by the Bombay High Court in the case of M/s. Godrej & Boyce Manufacturing Co. Ltd., 328 ITR 81 without examining the peculiar transactions taken place, which amounts to a device and recorded a perverse finding?

2.

Whether the Tribunal was correct in not recording a finding that the loan obtained from a Bank, depositing the same as share application money in a subsidiary company and taking back the same amount as an inter- corporate deposit on the same day and the interest paid is disallowable u/s.14A of the Act?’

2.

The facts giving rise to filing of the appeal briefly stated are that the assessee is a non banking financial institution. The assessee filed return of income for the Assessment Year 2007-08 declaring the total loss of Rs.44,00,286/-. The Assessing Officer concluded the assessment by order dated 30.12.2009 and determined

the income of the assessee at Rs.3,90,17,741/-. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax – Appeals, who by order dated 30.12.2009 partly allowed the appeal preferred by the assessee. Being aggrieved, the revenue as well as the assessee filed appeals for the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’, for short). The Tribunal by a common order dated 18.07.2012 remitted the matter to the Assessing Officer with a direction to pass a speaking order by bringing necessary materials on record for making disallowance as per law, after affording an opportunity of hearing to the assessee to put forth its case. The assessee was also directed to co-operate with the assessing officer in deciding the aforesaid issue. Accordingly, the appeals preferred by the assessee as well as the revenue were disposed of. Being aggrieved, the revenue is in appeal before us.

3.

Learned counsel for the revenue has raised a singular contention that the Tribunal while passing the impugned order has directed the Assessing Officer to decide the issue in view of the law laid down by the Bombay High Court in the case of ‘M/S. GODREJ & BOYCE MANUFACTURING CO. LTD.’, 328 ITR 81 and there are several other judgments on the issue, which has been remitted for consideration before the Assessing Officer and the order of the Tribunal be modified and the Assessing Officer be directed to decide the issue remitted to him as per the extant position of law. The aforesaid submission has not been fairly opposed by learned counsel for the assessee.

For the aforementioned reasons, it is not necessary for us to deal with the substantial questions of law framed by this Court. As agreed to by learned counsel for the parties, the order dated 18.07.2012 passed by the Tribunal is modified and the Assessing

Officer is directed to decide the issue remitted to it in accordance with the extant legal position.

In the result, the appeal is disposed of.

Sd/- JUDGE

Sd/- JUDGE

dn/- CT-HR

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