THE COMMISSIONER OF INCOME TAX vs. M/S KARANTAKA STATE SEEDS

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ITA/146/2014HC KarnatakaKAHC01012899201413 March 2015Bench: S.SUJATHA,VINEET SARAN3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that while the expenditure might not be strictly deductible under Section 35, it was a genuine business expenditure. The High Court agreed with the Tribunal's finding of fact regarding the actual incurrence of the expenditure.

What were the facts?

The assessee, a public sector undertaking, claimed deduction for scientific research expenditure under Section 35. The Assessing Officer disallowed it, and the Commissioner allowed a partial deduction. The Tribunal upheld the Commissioner's allowance, finding the expenditure to be business expenditure.

What were the issues?

Whether expenditure incurred by the assessee, though not strictly qualifying under Section 35, could be allowed as business expenditure. Whether the Tribunal's finding of fact regarding the actual incurrence of expenditure was sustainable.

Which sections of the Income-tax Act were involved?

Section 35

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 13TH DAY OF MARCH 2015

PRESENT

THE HON'BLE MR. JUSTICE VINEET SARAN

AND

THE HON’BLE MRS. JUSTICE S.SUJATHA

ITA NO 146 OF 2014

BETWEEN

1.

THE COMMISSIONER OF INCOME TAX

C R BUILDING, QUEENS ROAD

BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(5) RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE.

... APPELLANTS

(BY SRI. K V ARAVIND, ADV.)

AND

M/S KARNATAKA STATE SEEDS CORPORATION BEEJ BHAVAN, BELLARY ROAD HEBBAL, BANGALORE.

...RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 08/10/2013 PASSED IN ITA NO.194/BANG/2013, FOR THE ASSESSMENT YEAR 2009-2010.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J. DELIVERED THE FOLLOWING:

JUDGMENT

The present appeal has been filed by the Revenue against the order of the Tribunal whereby, in the case of the respondent (for the assessment year 2009-10) the actual expenditure incurred by the respondent to the tune of Rs.35.89 lakhs has been allowed by the Tribunal.

2.

The brief facts of the case are that the respondent- assessee is a public sector undertaking wholly owned by the Government of Karnataka. For the assessment year 2009-10, it had claimed deduction of Rs.53,84,956/- under Section 35 of the Income Tax Act, 1961 (for short ‘the Act’), which relates to expenditure on Scientific research. The said expenditure was disallowed by the Assessing Officer. In appeal, the Commissioner allowed the deduction of Rs.35.89 lakhs as against Rs.53,84,956/- claimed by the assessee. After arriving at a finding that though the relevant certificate was not available yet on facts it was found by the Commissioner that the assessee had incurred the aforesaid expenses. Challenging the said order the revenue filed an appeal before the Tribunal. The Tribunal, by the impugned order, has

categorically held that though the respondent-assessee would not be entitled for deduction under Section 35 of the Act but since there was no dispute about the actual expenditure incurred by the assessee, which the Tribunal had found to be business expenditure and not capital expenditure, the expenditure allowed by the Commissioner to the tune of Rs.35.89 lakhs was maintained by the Tribunal. 3. In view of the fact that the categorical finding of fact has been recorded by the Tribunal that the said amount was actually incurred by the assessee towards business expenditure and allowed the same, we are of the view that the same would be covered under Section 35 of the Act.

4.

In our view, no interference is called for with the order of the Tribunal. As no substantial question of law arises for determination of this Court. The appeal is accordingly dismissed.

Sd/-

JUDGE

Sd/-

JUDGE TL

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