HINDUSTAN AERONAUTICS LIMITED, vs. ASSISTANT COMMISSIONER

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF DECEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.481 OF 2016 BETWEEN: HINDUSTAN AERONAUTICS LIMITED NO.15/1, CUBBON ROAD BANGALORE-560001 REPRESENTED HEREIN BY ITS DIRECTOR - FINANCE MR. C.V. RAMANA RAO. ... APPELLANT (BY SRI. T. SURYANARAYANA, ADV.,) AND: 1. ASSISTANT COMMISSIONER

OF INCOME TAX -3(1)(2)

(ERSTWHILE DEPUTY INCOME

TAX-11(4)), ROOM NO.228, 2ND

FLOOR BMTC BUILDING

KORAMANGALA 6TH BLOCK

BANGALORE-560095. 2. PRINCIPAL COMMISSIONER

OF INCOME TAX-3

ROOM NO.518, 5TH FLOOR

BMTC BUILDING

KORAMANGALA 6TH BLOCK

BANGALORE-560095. ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADV.)

2 - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 31.05.2016 PASSED IN ITA NO.563/BANG/2014 FOR THE ASSESSMENT YEAR 2010-11, PRAYING TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE TRIBUNAL DATED 31-05-2016 PASSED IN ITA NO.563/BANG/2014 (ANNEXURE-C), TO THE EXTENT QUESTIONED HEREIN AND (III) PASS SUCH OTHER OR SUITABLE ORDERS AS THIS HON'BLE COURT DEEMS FIT TO PASS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE INTERESTS OF JUSTICE AND EQUITY. 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 assessee. The subject matter of the appeal pertains to the Assessment year 2010-11. The appeal was admitted by a bench of this Court vide order dated 06.12.2017 on the following substantial questions of law:

3 Whether on the facts, in the circumstances and on the grounds and contentions urged: (i) the Tribunal was right in holding that expenses to the extent of Rs.638,33,49,000/- incurred towards research and development is capital in nature? (ii) the Tribunal was correct in upholding the disallowance made under Section 14A of the Act?. 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.404/2016 connected with I.T.A.No.486/2016, the substantial questions of law framed by a bench of this court are answered in favour of the assessee and against the revenue. In the result, the order of the Tribunal dated 31.05.2016 in so far as it pertains to disallowance of the claims of the assessee under Section 37 and Section 14A

4 of the Act is hereby quashed and the appeal is disposed of. Sd/- JUDGE Sd/- JUDGE ss