THE COMMISSIONER OF INCOME TAX, vs. M/S NORTH WESTERN KARNATAKA ROAD

1 IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT DHARWAD DATED THIS THE 27th DAY OF FEBRUARY 2013 PRESENT THE HON’BLE MR.JUSTICE H.BILLAPPA AND THE HON’BLE MRS.JUSTICE B.S.INDRAKALA I.T.A.No.5011/2011 a/w I.T.A.CROB.11/2013 c/w I.T.A.No.5010/2011 a/w I.T.A.CROB.12/2013 ITA NO.5011/2011 BETWEEN: The Commissioner of Income Tax, Navanagar, Hubli. .. APPELLANT (By Sri. Y.V.Raviraj, Adv.) AND: M/s North Western Karnataka Road Transport Corporation, Central Office, Gokul Road, Hubli. ..RESPONDENT (By Sri. S. Parthasarathi, Adv.)

2 ITA filed u/s 260-A of the Income Tax Act, 1961 against the order passed in ITA No.734/2010 dated 16.3.2011 on the file of the Income Tax Appellate Tribunal, ‘A’ Bench, Bangalore, partly allowing the appeals of the assessee for the assessment years 2005-06 and 2006-07 for statistical purpose. ITA CROB.11/2013 IN ITA 5011/2011 : BETWEEN: M/s North Western Karnataka Road Transport Corporation, Central OFFICE, Gokul Road, Hubli. ..CROSS OBJECTOR (By Sri. S. Parthasarathi, Adv.) AND: The Dy. Commissioner of Income Tax, Circle 3(1), Hubli. .. RESPONDENT (By Sri. Y.V.Raviraj, Adv.) ITA CROB in ITA No.5011/11 filed u/s 260-A of Income Tax Act, 1961, r/w Order 41 Rule 22 of CPC,1908, against the order passed in ITA No.734/Bang/2010 dated 16.3.2011 on the file of the Income Tax Appellate Tribunal, ‘A’ Bench, Bangalore, partly allowing the appeal filed by the assessee for the assessment year 2005-06 for statistical purpose.

3 ITA NO.5010/2011 BETWEEN: The Commissioner of Income Tax, Navanagar, Hubli. .. APPELLANT (By Sri. Y.V.Raviraj, Adv.) AND: M/s North Western Karnataka Road Transport Corporation, Central Office, Gokul Road, Hubli. ..RESPONDENT (By Sri. S. Parthasarathi, Adv.) ITA filed u/s 260-A of the Income Tax Act, 1961 against the order passed in ITA No.735/2010 dated 16.3.2011 on the file of the Income Tax Appellate Tribunal, ‘A’ Bench, Bangalore, partly allowing the appeal of the assessee for the assessment years 2005-06 and 2006-07. ITA CROB.12/2013 IN ITA 5010/2011 : BETWEEN: M/s North Western Karnataka Road Transport Corporation, Central Office, Gokul Road, Hubli. ..CROSS OBJECTOR (By Sri. S. Parthasarathi, Adv.)

4 AND: The Dy. Commissioner of Income Tax, Circle 3(1), Hubli. .. RESPONDENT (By Sri. Y.V.Raviraj, Adv.) ITA CROB in ITA No.5010/11 filed u/s 260-A of Income Tax Act, 1961, r/w Order 41 Rule 22 of CPC,1908, against the order passed in ITA No.735/Bang/2010 dated 16.3.2011 on the file of the Income Tax Appellate Tribunal, ‘A’ Bench, Bangalore, partly allowing the appeal filed by the assessee for the assessment year 2006-07 for statistical purpose. THESE APPEALS AND CROSS OBJECTIONS COMING ON FOR ORDERS THIS DAY, BILLAPPA, J., DELIVERED THE FOLLOWING:- JUDGMENT These appeals and the cross objections are directed against the order, dated 16.3.2011, passed by the Income Tax Appellate Tribunal ‘A’ Bench, Bangalore, in ITA Nos.734 and 735 of 2010 for the assessment years 2005-2006 and 2006- 2007.

5 2. By the impugned order, the appellate Tribunal has remitted the matter for fresh consideration. 3. Aggrieved by that, the appellant has filed these appeals. The assessee has filed cross objections. 4. Briefly stated the facts are: The respondent - Corporation is established under the RTC Act, 1950 for providing public transport service. For the assessment year 2005-2006, the respondent filed returns showing loss/deficit of Rs.45.16 crores. The assessment was completed on 10.5.2007 under section 143(3) after making certain additions/adjustments determining the loss at Rs.8.60 crores. 5. For the assessment year 2006-2007, the respondent filed returns showing loss/deficit of Rs.80,99,27,539/- The assessment was completed on 10.5.2007 u/s 143(3) of the Act after making certain additions/adjustments determining the income at Rs.Nil.

6 6. Subsequently, the appellant passed an order dated 26.3.2010 u/s 263 holding that the order passed u/s 143(3) of the Act by the assessing Authority for the years 2005-2006 and 2006-2007 was erroneous and prejudicial to the interest of the revenue. The respondent preferred appeals before the Income Tax Appellate Tribunal ‘A’ Bench, Bangalore, in ITA Nos.734 and 735/2010. The Appellate Tribunal, by its order dated 16.3.2011, has remitted the matter for fresh consideration to the Assessing Authority. While doing so, the Appellate Tribunal has given detailed reasons. Aggrieved by that, the appellant has filed these appeals. The assessee has filed cross-objections. 7. The learned counsel for the appellant contended that the revisional Authority has remitted the matter for fresh consideration. Therefore, the appellate Tribunal was not justified in giving detailed reasons. Further he submitted that the appellate Tribunal has also remitted the matter for fresh consideration. Therefore, the assessing Authority may be directed to reconsider the matter on all aspects.

7 8. As against this, the learned counsel for the respondent/cross objector submitted that the appellate Tribunal on proper consideration of the material on record has rightly observed that the assessing officer has rightly allowed appropriate deduction for exemption. Further he submitted that he has no objection to reconsider the matter on all aspects. 9. We have carefully considered the submissions made by the learned counsel for the parties. 10. The point that arises for our consideration is: Whether the impugned order calls for interference? 11. It is relevant to note, the assessing Authority after making certain additions and adjustments has determined the loss at Rs.8.60 crores for the year 2005-2006 and determined the income at Nil for the year 2006-2007. The appellant in exercise of power u/s 263 has remitted the matter for fresh consideration to the assessing Authority. The

8 appellate Tribunal after giving detailed reasons has observed as follows at para 21(ii): “ 21(ii) In view of the above proposition, we are of the firm view that the assessing officer had rightly allowed the appropriate deduction for exemption.” At para.22, the appellate Tribunal has observed as follows: “ Lastly, the assessee had come up with an additional ground for both the AYS under dispute wherein, it has been, interalia pleaded that the amount withdrawn from depreciation reserve was not to be included in the gross income of the assessee for the purpose of section.11 of the Act. Since this issue has a bearing on the utilization of depreciation reserve which has been deliberated upon in the fore-going paragraphs and remitted back on the file of the Ld. A.O for fresh consideration, we are of the considered view that this issue should also be remitted back to the A.O for examination and to take appropriate action in accordance with law. It is ordered accordingly.”

9 12. Therefore, it is clear, the appellate Tribunal and also the revisional Authority have remitted the matter for fresh consideration. All the issues need to be considered afresh. Therefore, we direct the assessing Authority to reconsider the matter afresh on all grounds without being influenced by the observations made by the revisional Authority or the appellate Tribunal. Accordingly, the appeals and cross objections are disposed of directing the assessing Authority to reconsider the matter on all aspects for the assessment years 2005-2006 and 2006-2007 by giving opportunity to the parties. All contentions of the parties are left open. (Sd/-) JUDGE

(Sd/-) JUDGE Dvr.