THE PR. COMMISSIONER OF INCOME TAX vs SHRI. V. ANANTHA KUMAR

1/11 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JULY, 2018 PRESENT THE HON’BLE Dr.JUSTICE VINEET KOTHARI AND

THE HON’BLE MRS.JUSTICE S SUJATHA ITA No.1017/2017 c/w ITA No.1016/2017, ITA No.1019/2017, ITA No.1018/2017

ITA No.1017/2017 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX

5TH FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095.

THE INCOME TAX OFFICER

WARD-1, CHAMARAJANAGAR

PRESENT ADDRESS

ASSISTANT COMMISSIONER OF INCOME-TAX

CIRCLE-2(2)(1)

2ND FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095. ... APPELLANTS

(BY SRI: K V ARAVIND, ADV)

AND:

SHRI.V.ANANTHA KUMAR PROP. BILLGIRI GRANITES B.R.HILLS ROAD CHAMARAJANAGAR-571 441. ... RESPONDENT

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 2/11

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 20.03.2017 PASSED IN ITA NO.402/BANG/2015, FOR THE ASSESSMENT YEAR: 2006-2007, PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.402/BANG/2015 DATED:20.03.2017 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(2)(1), BENGALURU. (iii) TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON’BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY.

ITA No.1016/2017 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX

5TH FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095.

THE ASST. COMMISSIONER OF INCOME-TAX

CIRCLE-2(2)(1)

2ND FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095. ... APPELLANTS

(BY SRI: K V ARAVIND, ADV)

AND:

SHRI.V.ANANTHA KUMAR PROP. BILLGIRI GRANITES 50/B, 4TH FLOOR VYSHANAVI APARTMENTS 4TH CROSS, NEAR LINK ROAD MALLESWARAM BENGALURU-560 003. ... RESPONDENT

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 3/11

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 20.03.2017 PASSED IN ITA NO.1442/BANG/2015, FOR THE ASSESSMENT YEAR: 2007-2008, PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1442/BANG/2015 DATED: 20.03.2017 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2)(1), BENGALURU. (iii) TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON’BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY.

ITA No.1019/2017 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX

5TH FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095.

THE INCOME TAX OFFICER

WARD-1, CHAMARAJANAGAR

PRESENT ADDRESS

ASST. COMMISSIONER OF INCOME-TAX

CIRCLE-2(2)(1), 2ND FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095. ... APPELLANTS

(BY SRI: K V ARAVIND, ADV)

AND:

SHRI.V.ANANTHA KUMAR PROP. BILLGIRI GRANITES B.R.HILLS ROAD CHAMARAJANAGAR-571 441. ... RESPONDENT

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 4/11

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:20.03.2017 PASSED IN ITA NO.403/BANG/2012 FOR THE ASSESSMENT YEAR: 2009-2010, PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU ITA NO.403/BANG/2012 DATED: 20.03.2017 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2)(1), BENGALURU. (iii) TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON’BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY.

ITA No.1018/2017 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX

5TH FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095.

THE INCOME TAX OFFICER

WARD-1, CHAMARAJANAGAR

PRESENT ADDRESS

ASST. COMMISSIONER OF INCOME-TAX

CIRCLE-2(2)(1), 2ND FLOOR, BMTC BUILDING

80 FEET ROAD, KORAMANGALA

BENGALURU-560 095. ... APPELLANTS

(BY SRI: K V ARAVIND, ADV)

AND:

SHRI.V.ANANTHA KUMAR PROP. BILLGIRI GRANITES

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 5/11

B.R.HILLS ROAD CHAMARAJANAGAR-571 441. ... RESPONDENT

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 20.03.2017 PASSED IN C.O.NO.87/BANG/2013, FOR THE ASSESSMENT YEAR:2006-2007, PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN C.O.NO.87/BANG/2013 DATED: 20.03.2017 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2)(1), BENGALURU. (iii) TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON’BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY.

THESE ITAs COMING ON FOR ADMISSION THIS DAY, Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING: JUDGMENT

Mr. K.V. Aravind, Adv for Appellant-Revenue

These appeals have been filed by the Revenue raising the purported substantial questions of law under Section 260-A of the Income Tax Act, 1961 (For short ‘The Act’) arising from the order of the Income Tax Appellate Tribunal dated 20.03.2017 in ITA

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 6/11

No.1442/BANG/2015 for Assessment Year 2007-08, ACIT, Circle-(2)(2)(1), Bangalore.

The suggested substantial questions of law in the Memorandum of Appeal are quoted below for ready reference:

“1. Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the activity of EOU started from the assessment year 2000- 2001, overlooking the fact that no new unit was formed by the assessee, as evident from the certificate from Cochin Economic Zone, which shows that only the old unit of Biligiri Granite was converted into EOU?

Whether on the facts and in the circumstances of the case, the ITAT is correct in holding that assessee is eligible for deduction under section 10B of the Act ignoring that assessee had not satisfied the requirements of condition mentioned in clause 10B(2)(ii) and the fact that most of the new machinery was purchased for

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 7/11

continuing the activity of the old business which was already in existence which results in violation of conditions set out in section 10B of the ACT?”

The relevant findings of the learned Tribunal with regard to aforesaid suggested substantial questions of law are as under:

“As far as the appeal of the Department for AY 2006-07 is concerned, it is seen that the Ld. CIT(A) has given a categorical finding that on the basis of evidences available on record it is established that the new unit was registered on 31.03.1999 and that as per record, the new unit started its activity of manufacturing and exporting granite monuments etc. from its new factory building w.e.f. AY 2000-01. The Ld. CIT(A) has also given a finding that the condition that the assessee should establish a new unit has been satisfied and is evidenced by Certificate of Registration from the Directorate of Industries. The Ld., CIT(A) has also noted that the name of the

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 8/11

new unit had to be changed from M/s SM Natural Stones to M/s Biligiri Granites due to an objection from the Commercial Tax Department. The Ld. CIT (A) has not drawn any adverse inference from this similarity of names. Further, the Ld. CIT (A), after examining the Balance Sheets of the assessee, has recorded a finding accepting the assessee’s contention that the activity of the EOU started from AY 2000-01 and has noted that prima facie the assessee was eligible for deduction u/s 10B for a period of 10 years starting from AY 2000-01 and since AY 2006-07 fell within the ten year bracket, the assessee would be eligible for the deduction u/s 10B in AY 2006-07. We are of the opinion that all these findings by the Ld. CIT (A) are finding of fact and the Department has also not been able to controvert these. Therefore, we find no reason to interfere with the finding of the fact by the Ld. CIT (A) that the initial year for the new unit was AY 2000-01.

5.0.2 The Department’s next point of agitation is the percentage/ratio of old

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 9/11

machinery. On this issue, the Ld. CIT (A) has referred to the details filed before the AO by the assessee and has noted that the total value of machinery was Rs.35,02,775/- whereas the Written Down Value was Rs.4,96,937/- which was less than 20% of the total value of machinery and, therefore, this condition also stood satisfied by the assessee. The Department has not been able to bring out any fact on record to negate this finding of the Ld. CIT (A) also and we agree to this factual finding by the Ld. First Appellate Authority”.

Learned counsel for the Revenue has also produced a copy of the order dated 28.01.2003 issued by the Office of the Development Commissioner, Cochin Special Economic Zone, Sub- Office for 100% EOUs in Karnataka, Ministry of Commerce & Industry, Government of India, Bangalore, to the effect of registration of the respondent/Assessee’s Unit of M/s Biligiri Granites

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 10/11

as 100% EOU for manufacture and export of Granite Monuments, Granite Slabs and Dimensional Granite Blocks. Such registration has been granted to the said respondent/Assessee’s unit vide order dated 28.01.2003, which is taken on record. The Provisions of Section 10B of the Act gives the benefit of deduction for a period of ten consecutive assessment years and therefore, Assessment Year 2006-07 to Assessment Year 2009-10 involved in the present 4 appeals, is the period covered within the said period of 10 years under Section 10B of the Act.

Since the findings of fact given by the learned Tribunal are categoric and clear that the Assessee’s unit was a newly established 100% EOU duly registered w.e.f. 28.01.2003 as indicated above, therefore, the learned Tribunal has rightly allowed

Date of Judgment:30.07.2018 ITA No.1017/2017 & connected matters The Pr. Commissioner of Income Tax & Anr.

Vs. Shri V Anantha Kumar 11/11

the said benefit in favour of the respondent/Assessee.

We do not find these findings of the learned Tribunal to be wrong or perverse in any manner and therefore, in our considered opinion, no substantial question of law arises in the present appeals filed by the Revenue which calls for further consideration.

The appeals filed by the Revenue are accordingly dismissed. No costs.

A copy of the order be sent to the respondent/Assessee.

Sd/- JUDGE

brn (List No.1 Sl.No.3)

THE PR. COMMISSIONER OF INCOME TAX vs. SHRI. V. ANANTHA KUMAR