Loading judgment…
No AI summary yet for this case.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF FEBRUARY 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND
THE HON’BLE MR. JUSTICE RAVI V. HOSMANI
ITA No.385/2010
BETWEEN:
The Commissioner of Income-tax, C.R.Building Queens Road, Bangalore.
The Asst. Commissioner of Income Tax, Circle-11(5), C.R.Building Queens Road, Bangalore. ...APPELLANTS
(By Sri. K.V Aravind, Advocate )
AND: M/s JSW Steel Limited, (Formerly known as Jindal Vijayanagar Steel Limited) Jindal Mansion, 5A, Dr. G Deshmukh Marg. Mumbai 40026 …RESPONDENT
(By Sri. A Shankar, Senior Advocate, a/w Sri Venkatesh K Pani, Advocate)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31.5.2010 PASSED IN ITA NO.931/BANG/2009,FOR THE ASSESSMENT YEAR 2005-2006.
THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
Sri. K.V. Aravind , learned counsel for the revenue.
Mr. A Shankar, learned senior counsel along with Mr. Venkatesh K Pani, learned counsel for the respondent.
This appeal, under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) has been filed by the revenue, which was admitted by a Bench of this Court vide order dated 26.03.2012 on the following substantial questions of law:
“1. Whether the Appellate Authorities were correct in holding that the amount of Rs.29,94,876/- an inter -corporate deposit paid to M/s Sky Build Pvt. Ltd., should be written off as an expenditure when this deposit was not advanced in the course of the business of the assessee of manufacture of steel etc., and the interest income earned in the earlier
3 years was assessed under the head “income from other sources”? 2) Whether the Appellate Authorities were correct in relying on the order passed or the earlier assessment year in granting relief to the assessee without examining the facts of the present case had applying the legal position to it?
The facts giving rise to filing of this appeal briefly stated are that, the assessee is carrying on the business of manufacturing and sale of pellets, hot/cold rolled coils/sheets and plates and slag cement. In respect of the assessment year 2005-2006, the assessee filed the return of income tax on 29.10.2005, by which the income was declared as NIL. The Assessing Officer passed an order dated 31.12.2007 and held that the deposits given to M/s Sky Build Pvt. Ltd., was not in the course of business and the interest income earned on such deposits was liable to tax under the head “income from other sources”. As section 57 of the Act did not provide for allowing such an expenditure by writing off the same, it was disallowed. Being aggrieved an appeal was preferred.
4 3. The Commissioner of Income - Tax(Appeals)-I by an order dated 10.07.2009 inter-alia held that the Income Tax Appellate Tribunal in the case of the assessee itself for the earlier assessment year has held that the amount was liable to be allowed. The aforesaid order was challenged before the Income Tax Appellate Tribunal. The Tribunal by an order dated 31.05.2010 affirmed the order passed by the Income Tax Appellate Tribunal. In that factual back ground, this appeal has been filed by the revenue.
Learned counsel for the revenue submitted that the Assessing Officer was justified in holding that the income derived from interest on the deposits was liable to be taxed under the head of “income from other sources” and Section 57 of the Act did not provide for allowing of such an expenditure by writing off the same.
On the other hand, learned Senior counsel for the assessee has supported the order passed by the Income Tax Appellate Tribunal.
5 6. We have considered the submissions made by the learned counsel for the parties. It is pertinent to mention here that the Income Tax Appellate Tribunal Bengaluru Bench in the assessee’s case for the assessment year 1995-96 by an order dated 12.11.2002 held that the Memorandum of Association of the assessee company enables it to carry on the business of investment for inter-corporate deposits and the assessee has indulged in such business by virtue of special resolution passed by the shareholders as required by the Company’s Act. Therefore, the submission made on behalf of the assessee that the loss was in the nature of business loss was accepted. It was further held that the amount of inter-corporate deposits written off by the assessee was entitled for deduction in computing the taxable income. The aforesaid decision was upheld by a Division Bench of this Court by an order dated 17.08.2011 passed in ITA No.150/2003 and was answered against the revenue.
For the aforesaid mentioned reasons and for the reasons assigned by a Bench of this Court vide order dated 17.08.2011 passed in ITA No.150/2003, the substantial
6 questions of law framed by a Bench of this Court are answered against the revenue and in favour of the assessee.
In the result, the appeal fails and is hereby dismissed.
Sd/- JUDGE
Sd/-
JUDGE
Psg*