COMMISSIONER OF INCOME TAX vs. M/S KARNATAKA INDUSTRIAL AREA

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ITA/3/2017HC KarnatakaKAHC01019868201716 October 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD5 pages
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What did the High Court hold?

The High Court held that substantial question of law (3) regarding depreciation disallowance was already answered by a previous judgment in favour of the assessee. The court disposed of the appeal with liberty to argue other questions in a separate appeal.

What were the facts?

The Revenue appealed against an ITAT order concerning the assessment year 2010-11. The appeal raised questions about the assessee's entitlement to exemption under Section 12A, deletion of additions for leasing charges, and disallowance of depreciation.

What were the issues?

Whether the assessee was entitled to exemption under Section 12A, whether additions for leasing charges were rightly deleted, and whether depreciation disallowance was justified.

Which sections of the Income-tax Act were involved?

Section 12A,Section 2(15)

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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 16TH 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.3 OF 2017 BETWEEN:

1.

COMMISSIONER OF INCOME TAX., BENGALURU.

2.

THE DEPUTY DIRECTOR OF INCOME TAX(E),CIRCLE 17(1) BENGALURU.

…. APPELLANTS (BY SRI.E.I.SANMATHI, ADV.)

AND

M/S KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD NO.14/3, 2ND FLOOR R.P.BUILDING, NRUPATHUNGA ROAD BENGALURU-560 001. …RESPONDENT (BY SRI.CHYTHANYA K.K., ADV. FOR C/R)

THIS ITA IS FILED UNDER SECTION 260(A) OF INCOME TAX ACT 1961, ARISING OUT OF ORDER

2 DATED: 20.04.2016 PASSED IN ITA NO.822/BANG/2014, FOR THE ASSESSMENT YEAR 2010-11. PRAYING THIS HON’BLE COURT TO 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 AND SET ASIDE THE APPELLATE ORDER DATED:20.04.2016 PASSED BY THE ITAT,’B’ BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.ITA NO.822/BANG/2014 FOR ASSESSMENT YEAR 2010-11 AS SOUGHT FOR IN THIS APPEL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS ITA COMING ON FOR ADMISSION, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr.E.I.Sanmathi, learned counsel for the Revenue. Mr.K.K.Chythanya, learned counsel for the assessee.

2.

This appeal under Section 260A of the Income Tax Act, 1961 has been filed by the Revenue. The subject matter pertains to the Assessment year

3 2010-11. The appeal was admitted by a Bench of this Court vide order dated 9.8.2017 on following substantial questions of law: (1) Whether on the facts and in the circumstances of the case, tat the Tribunal was right in holding that the assessee is entitled for exemption under section 12A of the Act by following the judgment of this Hon’ble High Court which has not reached finality even though the activities carried out by the assessee comes under amended provisions of section 2(15) of the Act?

(2) Whether on the facts and in the circumstances of the case, that the Tribunal was right in deleting the addition of Rs.1.74 crores on account of lumpsum leasing charges received by assessee eventhough the Auditor has pointed out under- statement of income to the tune of Rs.5.81 crores by the assessee and, as such, claim of Rs.1.74 crores is not substantiated by asessee with any materials?

4 (3) Whether on the facts and in the circumstances of the case, that the Tribunal was right in setting aside disallowance of depreciation by following its earlier judgment of this Hon’ble High Court in the case of DCIT v/s. Jyothy Charitable Trust even when the assessing authority has rightly disallowed the claim of depreciation as it would tantamount to double deduction?

3.

At the outset, when the matter was taken up today, the learned counsel for the assessee pointed out that the substantial questions of law (1) and (2) do not arise in the factual situation of the case whereas substantial question of law (3) involved in this appeal has already been answered by the Bench of this Court in the case of Commissioner of Income Tax –v- Rajasthan and Gujarati Charitable Foundation [402 ITR 441]. The

5 aforesaid legal position could not be disputed by the learned counsel for the Revenue.

4.

We have considered the submissions made on both sides. In view of the law laid down by this Court in Rajasthan and Gujarati Charitable Foundation (supra) and for the reasons assigned therein, the substantial question of law (3) is answered against the Revenue and in favour of the assessee.

5.

In the result, the appeal is disposed of with liberty to the appellant to argue the substantial questions of law (1) and (2) in ITA No.2/2017.

Sd/- JUDGE

Sd/- JUDGE DM/-

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