M/S KARNATAKA INSTRADE CORPORATION LTD vs. THE ASST COMMISSIONER OF INCOME TAX

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ITA/116/2010HC KarnatakaKAHC01029252201009 October 2015Bench: B.MANOHAR,VINEET SARAN6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that the Tribunal's dismissal of the appeal based on prior orders, which were themselves partly allowed, was unsustainable. The matter was therefore remanded back to the Tribunal for fresh consideration.

What were the facts?

The assessee, a cement manufacturing company, claimed a deduction for inventories written off. The Assessing Officer disallowed this claim, and the First Appellate Authority partly allowed it. The Tribunal dismissed the assessee's appeal without going into the merits, relying on previous orders.

What were the issues?

Whether the Tribunal was justified in disallowing the deduction for inventories written off without a reasoned order. Whether the Tribunal erred in relying on previous orders that were subsequently modified.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 254(2)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 09TH DAY OF OCTOBER 2015

PRESENT

THE HON’BLE MR.JUSTICE VINEET SARAN AND THE HON’BLE MR.JUSTICE B MANOHAR ITA No. 116 OF 2010 (IT)

BETWEEN :

M/s.Karnataka Instrade Corporation Ltd., Rep. by its Managing Director Sri. M.R.Seetharam (formerly known as M/s.Karnataka Minerals & Manufacturing Co Ltd.,) No.1, GEF Administrative Block, New BEL Road, MSRIT Post, Bangalore – 560054. …Appellant (By Sri. A.Shankar & M.Lava Advs.,)

AND:

The Asst. Commissioner of Income-Tax, Central Circle-2(2), C.R.Building, Queens Road, Bangalore – 560001. …Respondent (By Sri. K.V.Aravind & Sri. G.Kamaladhar, Advs.,)

This ITA is filed U/S.260-A of I.T.Act, 1961 arising out of Order dated 20-11-2009 passed in ITA No.856/BNG/2009 and MP No.6/Bng/2010 dated 10/2/2010, for the Assessment Year 2004-05, praying that this Hon’ble Court may be pleased to:

i. Formulate the substantial questions of law stated therein,

ii. Allow the appeal and set aside the order passed by the ITAT Bangalore in ITA No.856/BNG/2009 and MP No.6/Bng/2010 dated 10-02-2010, dated 20-11-2009, in the interest of justice and equity.

This Appeal is coming on for hearing and reserved for orders on 08/09/2015, this day B.MANOHAR J,. pronounced the following:

JUDGMENT

The assessee preferred this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) being aggrieved by the order dated 20-11-2009 made in ITA No.856/Bang/2008 and the order dated 10-02-2010 made in Misc. Petition No.6/Bang/2010 passed by the Income Tax Appellate

3 Tribunal (hereinafter referred to as ‘the Tribunal’ for short) for the assessment year 2004-05.

2.

The assessee is a public limited company, manufacturing cement in the factory situated at Mathodu village, Hosadurga Taluk. The assessee filed return of income on 31-3-2004, declaring an income of Rs.2,58,12,218/- after setting off unabsorbed depreciation of earlier years to an extent of Rs.3,39,62,012/-. The return was accompanied with the computation of total income, balance sheet, profit and loss account and relevant schedule. However, the Assessing Officer disallowed a sum of Rs.2,23,52,396/- towards inventories written off, as the assessee did not carry on any business during the assessment year 2003-04 and also disallowed various expenditure. Being aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘the First Appellate Authority’ for short). The First Appellate Authority

4 partly allowed the appeal by allowing the expenditure of Rs.20,45,323/-. Being aggrieved by the order passed by the First Appellate Authority, the assessee preferred an appeal before the Tribunal. The Tribunal without going into the merits of the matter, relying upon the order made for the assessment year 2000-01 in ITA No.378/Bang/2006 dated 19-09-2008 dismissed the appeal, by its order dated 20-11-2009. Subsequently the assessee filed Misc.Petition No.6/Bang/2010 for rectification of the order dated 20-11-2009 invoking Section 254(2) of the Act. The said Misc. Petition was also dismissed relying upon the order made for the assessment year 2002-03 in ITA No.855/Bang/2008 dated 6-2-2009 without going into the merits of the case. Being aggrieved by these two orders, the assessee preferred this appeal.

3.

This appeal was admitted on 22-04-2010 on the following substantial questions of law:

(i) Whether the Tribunal was justified in not allowing deduction under the Income Tax Act in respect of the write off of inventories of Rs.2,23,52,396/-?

(ii) Whether the Tribunal was justified in law in not passing the reasoned order in respect of claim of the appellant on the facts and circumstances of the case?

4.

Since the appeal filed by the assessee for the assessment year 2002-03 on which reliance was placed was partly allowed by giving certain benefits to the assessee, the order passed by the Tribunal dismissing the appeal and the Miscellaneous petition filed by the assessee, relying upon the order made for the assessment year 2002-03 is not sustainable. Hence, the Tribunal is directed to reconsider the matter afresh for the assessment year 2004-05, in the light of the order made in ITA No.855/Bang/2008, in accordance with law.

6 5. Accordingly, without answering the substantial questions of law, this appeal is allowed and remanded to the Tribunal for considering the matter afresh, in accordance with law.

Sd/- JUDGE

Sd/- JUDGE

mpk/-*

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