Commissioner of Income Tax-II vs. Krishna Sai Exports Pvt Ltd.

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.416 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX

CENTRAL REVENUE BUILDINGS

QUEENS ROAD, BANGALORE-560001. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX

CIRCLE 12(1), BANGALORE. ... APPELLANTS (BY Mr. E.I. SANMATHI, ADV.,) AND: M/S. MEDI ASSIST (INDIA) TPA PVT. LTD 'SRI KRISHNA ARCADE' NO.47/1, 9TH CROSS, 1ST MAIN ROAD SARAKKI INDL LAYOUT BANGALORE-560078 PAN: AACCM8044R. ... RESPONDENT (BY Mrs. VANI H, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 05.04.2013 PASSED IN ITA NO.654/BANG/2012 FOR THE ASSESSMENT YEAR 2008-09, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN.

2 (II) SET ASIDE THE APPELLATE ORDER PASSED BY THE ITAT, 'A' BENCH, BANGALORE, IN I.T.A. NO.654/BANG/2012 DATED 05.04.2013, AS SOUGHT FOR IN THIS APPEAL. THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A 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 2008-09. The appeal was admitted by a bench of this Court vide order dated 07.10.2013 on the following substantial question of law: (i) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee is entitled to disclose revenue from certain activities spread over the period of insurance policies for Income Tax purpose rather than recognizing the entire amount in the year in which the invoices in respect of fee was raised on insurance companies?

3 (ii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee is allowed to change the method of accounting in the assessment year under reference in respect of TPA fee without appreciating the fact that as per AS-11 notified by the Central Government under section 145(2) of I.T. Act, change in accounting policy is allowed only if such change is required by the statute or if it is considered that the change would result in more appropriate preparation of financial statements and such conditions are absent in the instant case? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the activities of the assessee company are not of an insurance company/business without appreciating the fact that Hon'ble High Court in the case of same assessee has held that the assessee's business activities fall under the activities of insurance company?

4 (iv) Whether on the facts and in the circumstances of the case, the Tribunal is correct in coming to conclusion that the assessee is entitled to follow accounting standard 9 for revenue recognition in respect of TPA fee received from insurance companies? 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.593/2013, the substantial questions of law framed by a bench of this court are answered against the revenue and in favour of the assessee. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss