COMMISSIONER OF INCOME vs. SMT T N SHOBHA REDDY

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF FEBRUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.521 OF 2014 BETWEEN: 1. COMMISSIONER OF INCOME-TAX

REVENUE BUILDINGS, QUEENS ROAD

BANGALORE560001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX

CIRCLE 7(1), BANGALORE. ... APPELLANTS (BY SRI. E.R. INDRAKUMAR, SR. COUNSEL A/W SRI. E.I. SANMATHI, ADV.,) AND: SMT. T.N. SHOBHA REDDY GANGOTHRI, 18, I MAIN DEFENCE COLONY, INDIRANAGAR BANGALORE-560038 PAN:AIPPS9622M. ... RESPONDENT (BY SRI. ASHOK A. KULKARNI, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.07.2014 PASSED IN ITA NO.907/BANG/2013 AND C.O. NO.1/BANG/2014 FOR THE ASSESSMENT YEAR 2006-07, PRAYING TO: (i) DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT.

2 (ii) SET ASIDE THE COMMON APPELLATE ORDER DATED 08.07.2014 PASSED BY THE ITAT, 'A' BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. ITA NO.907/BANG/2013 AND C.O. NO.1/BANG/2014 FOR ASSESSMENT YEAR 2006-07. THIS I.T.A. 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 2006-07. The appeal was admitted by a bench of this Court vide order dated 23.06.2015 on the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal is correct in law in not recognizing the colourable device employed

by the assessee as envisaged by the Hon'ble Apex Court in case of McDowell and Co. Ltd., (reported in 158 ITR page 148) which resulted in massive tax evasion in the guise of tax planning laced with multi layered transactions?".

3 "(ii) Whether on the facts and circumstances of the case, the Tribunal is correct in law in not considering the fact that the shares belonging to the assessee were ultimately transferred to Godrej Group as part of sale of business of the Nutrine Group to Godrej Group, routed through a series of transactions including the reconstitution of the defunt firm M/s. B.V. Reddy Enterprises to accommodate the shareholders of M/s. Nutrine Confectionery Co. Pvt. Ltd., and guising the numerous transactions as genuine in quick span of time, with a sheer motive of avoidance of payment of actual capital gain?". "(iii) Whether on the facts and circumstance of the case, the Tribunal is correct in law in holding that the entire series of transactions by which the shares of NCCPL were ultimately transferred to GBFL were all valid and such an arrangement to avoid payment of taxes on account of correct quantum of capital gain that would result on transfer of shares of NCCPL to GBFL was permitted and within the framework of law without appreciating the complete thought

4 process and motive behind the series of transactions entered into by the assessee and family members?". 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.291/13, the substantial question of law framed by a bench of this court is 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