THE PR.COMMISSIONER OF INCOME TAX, CIT(A) vs. M/S KBD SUGARS AND DISTILLERIES LTD

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ITA/554/2016HC KarnatakaKAHC01044260201614 December 2021Bench: S.SUJATHA,S VISHWAJITH SHETTY3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was covered by a previous decision in a similar case involving the same assessee. Therefore, the substantial question of law was answered in favor of the assessee.

What were the facts?

The revenue appealed against an ITAT order that deleted an addition made under Section 40A(2). The addition was related to an interest-free loan given to a sister concern, which the revenue argued was funded by diverted funds.

What were the issues?

Whether the Tribunal was justified in deleting the addition made under Section 40A(2) concerning interest-free loans to a sister concern, despite the assessee having sufficient free funds.

Which sections of the Income-tax Act were involved?

Section 40A(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF DECEMBER, 2021 PRESENT

THE HON’BLE MRS. JUSTICE S.SUJATHA AND

THE HON’BLE MR. JUSTICE S.VISHWAJITH SHETTY

I.T.A.No.554/2016 BETWEEN: 1. The Pr. Commissioner of Income-Tax, CIT(A)

5th floor, BMTC Building, 80 feet road, Kormangala,

Bangalore-560095.

2.

The Asst. Commissioner of Income-Tax,

Circle-11(5), Present address

Circle-4(1)(1),

2nd floor, BMTC Building,

80 feet road, Kormangala,

Bangalore-560095.

… APPELLANTS

(By Sri K.V.Aravind, Adv.)

AND:

M/s. KBD Sugars & Distilleries Ltd., No.17, Sankey Road, Bangalore-560020.

… RESPONDENT

(By Sri V.Chandrashekar, for Sri M.Lava, Adv.)

This ITA is filed under Section 260-A of the Income Tax Act 1961, praying to set aside the orders passed by the ITAT, Bangalore, in ITA No.959/Bang/2013 dated 05.02.2016

confirming the order of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income Tax, Circle-4(1)(1), Bengaluru.

This appeal coming on for Final Hearing, this day, S.Sujatha J., delivered the following:

JUDGMENT

1.

This appeal has been admitted to consider the substantial questions of law at paras VI(1) and VI(3) framed in the appeal memorandum. However, learned Counsel for the revenue submitted that the appeal could be confined to consider only substantial question of law at para VI(2) framed in the appeal memorandum, which reads as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made under Section 40A(2) of the Act by holding that there is no reason to interfere with the findings of the CIT(A) that the assessee is having its own free fund which is sufficient for advance the interest free loan to the sister concern even though the assessee has diverted the funds which has been established by the assessing authority?"

2.

The said submission is placed on record. Appeal is confined to substantial question of law No.VI(2). The

aforesaid issue being covered by the decision rendered by this Court in the case of CIT VS M/S. KBD SUGARS & DISTILLERIES LTD., in ITA No.170/2014 dated 14.12.2021, the said substantial question of law is answered in favour of the assessee and against the revenue.

Resultantly, the appeal stands dismissed.

Sd/- JUDGE

Sd/- JUDGE

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