What did the High Court hold?

The High Court held that the first question of law was covered by its previous decisions in favor of the assessee. The Revenue did not press the second question of law.

The Revenue appealed against an ITAT order concerning AY 2006-07. The appeal raised two questions of law: one regarding the classification of income from letting out property with furniture, and another concerning the disallowance of director's remuneration.

What were the issues?

Whether income from letting out a building with furniture is taxable under House Property, and the correctness of disallowance of director's remuneration on a pro-rata basis.

CIT vs M/S. K.R.S. Enterprises Pvt | Karnataka High Court 2015

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 21ST DAY OF SEPTEMBER, 2015

PRESENT THE HON’BLE MR. JUSTICE VINEET SARAN

AND

THE HON’BLE MR. JUSTICE B MANOHAR

ITA No.251/2015

BETWEEN:

THE COMMISSIONER OF INCOME-TAX

C R BUILDINGS, QUEENS ROAD

BANGALORE.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -11(5) BANGALORE.

.. APPELLANTS

(BY SRI E I SANMATHI, ADV)

AND:

M/s. K.R.S.ENTERPRISES PVT. LTD., No.337/1A, 18TH CROSS UPPER PALACE ORCHARDS BANGALORE-560 080.

.. RESPONDENT

(BY SRI A SHANKAR AND SRI M LAVA, ADVs.)

THIS ITA IS FILED UNDER SECTION 260A OF INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 23.01.2015 PASSED IN ITA NO.1100/BANG/2014 FOR THE ASSESSMENT YEAR 2006-2007 PRAYING 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 APPELLATEORDER DATED 23.01.2015 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, `B’ BENCH, BANGALORE AS SOUGHT FOR IN THE RESPONDENT-ASSESSEE’S CASE IN APPEAL PROCEEDINGS IN ITA No.1100/BANG/2014 FOR ASSESSMENT YEAR 2006-2007.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET SARAN,, J., DELIVERED THE FOLLOWING:

J U D G M E N T

In this appeal, the following two substantial questions of law have been raised: 1. Whether the Tribunal was correct in not appreciating that the dominant object of the assessee was letting out building and providing furniture and fittings and other facilities for better utilization of the building and to get higher rents, the same constitutes the part of the building and any amount received towards such facilities constitutes income from building liable for tax under the head income from House Property?

Whether on the facts and circumstances of the case, the Tribunal is right in directing the

assessing officer to recompute disallowance using the ratio Rs.2,40,59,055; Rs.2,96,55,774, which worked out to Rs.2,64,174/- assessee company got relief of Rs.98,580/- even when the director’s duties are apportioned over the entire business of the assessee and the expense claimed on director’s remuneration have to be calculated on pro-rata basis, i.e., 3,30,36,912 : 4,37,14,829, accordingly Rs.3,62,754/- was rightly disallowed and added back to total income by the assessing authority?

Heard Sri E I Sanmathi, learned counsel appearing for the appellants as well as Sri A Shankar and Sri M Lava, learned counsel appearing for the respondent.

Learned counsel for the parties do not dispute the fact that the first question of law is covered by the decision of this Court in the case of Commissioner of Income Tax - vs - Velankani Information Systems (P) Ltd. in ITA Nos.374 & 375 of 2011 and 273 to 276 of 2012, as also the decision in Commissioner of Income Tax - vs - M/s.K.R.S. Enterprises P. Ltd., in ITA No.305 of 2012, wherein the said question has been decided in favour of the assessee and against the Revenue.

Learned counsel for the appellants has submitted that the appellants are not pressing the second question of law.

As such, the appeal stands dismissed as we are of the opinion that no question of law arises for determination by this Court.

Sd/- JUDGE

Bkm

THE COMMISSIONER OF INCOME TAX vs. M/S. K.R.S. ENTERPRISES PVT

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