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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ON THE 10TH DAY OF DECEMBER, 2018
BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH
AND
THE HON'BLE MR. JUSTICE K. NATARAJAN
INCOME TAX APPEAL NO.99 OF 2009
BETWEEN:
M/S. MANIPAL SOWBHAGYA NIDHI LIMITED, MANIPAL HOUSE,
MANIPAL, REPRESENTED BY ITS DIRECTOR,
SRI T. NARAYANA M. PAI, AGED ABOUT 67 YEARS, SON OF LATE DR. T.M.A. PAI.
... APPELLANT
(BY MRS. JINITA CHATTERJEE, ADVOCATE, FOR
SRI S. PARTHASARATHI, ADVOCATE)
AND:
THE ASSISTANT COMMISSIONER
OF INCOME-TAX, CIRCLE -1, UDUPI.
... RESPONDENT
(BY SRI K.V. ARAVIND, ADVOCATE)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET-ASIDE THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL BEARING I.T.A. NO.379/BNG/2008, FOR THE ASSESSMENT YEAR 2003-04.
THIS INCOME TAX APPEAL COMING ON FOR HEARING, THIS DAY, RAVI MALIMATH, J., DELIVERED THE FOLLOWING:
J U D G M E N T
The appellant is a non-banking financial institution carrying on the business of accepting deposits from members and lending the same to other members. On account of huge losses, a Scheme of compromise and arrangement was proposed under Section 391 of the Companies Act before this Court for Assessment Year 2003-04. Under these exceptional circumstances, the Company had settled certain dues on account of deposits and debentures to certain persons by paying them a part of the amount and the balance was treated as capital receipts. The Assessing Officer completed the assessment under Section 143(3)
of the Income Tax Act, 1961, (for short, ‘the Act’) by making additions of Rs.2,93,72,000/- of the forfeited principal portion of settlement amount treating it as a revenue receipt and as income from business. Aggrieved by the same, an appeal was filed before the Commissioner of Income Tax (Appeals), which was dismissed. Thereafter, an appeal was filed before the Tribunal. The Tribunal while relying on the earlier orders in the case of the assessee itself in I.T.A. Nos.626 and 627/BANG/07, dated 7-3-2008, for the Assessment Years 2003-04 and 2004-05 respectively of the sister concerned of the assessee dismissed the appeal. Hence, the present appeal.
This appeal was admitted to consider the substantial questions of law raised in Income Tax Appeal Nos.794 and 795 of 2008.
By the order dated 7-10-2014, the said appeals were held in favour of the assessee and
against the Revenue. Against the said order, a Special Leave Petition was filed and on leave being granted, the appeals were dismissed on the ground of monetary limits.
Under these circumstances, since the earlier order of the Tribunal was followed in the assessee’s case, we do not propose to take a different view. In terms of the earlier order passed by the Tribunal and as confirmed by this Court in Income Tax Appeal Nos.794 and 795 of 2008, disposed off on 7-10-2014, the substantial questions of law are answered in favour of the assessee and against the Revenue.
The appeal is, accordingly, disposed off.
SD/-
SD/- JUDGE
JUDGE
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