COMMISSIONER OF INCOME TAX vs. SHRI C V MADHUSUDHAN 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.456 OF 2013 BETWEEN: COMMISSIONER OF INCOME-TAX BANGALORE-III, C.R. BUILDINGS QUEENS ROAD, BANGALORE. ... APPELLANT (BY SRI. E.R. INDRAKUMAR, SR. COUNSEL A/W SRI. E.I. SANMATHI, ADV.,) AND: SRI. C.V. MADHUSUDHAN REDDY No.502, CMH ROAD, INDIRANAGAR BANGALORE-560038. ... 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 12.04.2013 PASSED IN ITA NO.574/BANG/2012, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (ii) SET ASIDE THE APPELLATE ORDER OF THE ITAT 'A' BENCH, BANGALORE IN ITA NO.574/BANG/2012 DATED 12.4.2013, AS SOUGHT FOR IN THIS APPEAL. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

2 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 2007-08. The appeal was admitted by a bench of this Court vide order dated 24.09.2013 on the following substantial questions of law: "(i) Whether the Tribunal was justified in law in placing reliance on its own order wherein the Hon'ble Tribunal did not recognized the colourable device employed by the assessee as envisaged by the Hon'ble Supreme Court in the case of McDowell & Co. Ltd., (154 ITR 148) which resulted in massive tax evasion in the guise of tax planning laced with multi layered transactions?". "(ii) Whether the Tribunal was justified in law in placing on its own order wherein the Hon'ble Tribunal has not considered the fact that the shares belonging to the assessee were ultimately transferred to Godrej Group as a

3 part of sale of business of the Nutrine Group to Godgrej 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. (P) 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 the Tribunal was justified in law in placing reliance on its own order wherein it is held that the entire series of transactions by which the shares of M/s. Nutrine Confectionery Co P Ltd were ultimately transferred to M/s. Godrej Beverage and Foods Ltd were all valid and such a course was permitted and within the frame work of law and that the transaction was not colourable or dubious device or subterfuge and were legal and valid without completely appreciating the complete thought process and motive behind the series of transactions entered into by the assessee and family members?".

4 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