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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 209 OF 2020 BETWEEN:
THE COMMISSIONER OF INCOME TAX EXEMPTIONS 6TH FLOOR, UNITY BUILDING ANNEXE MISSION ROAD BENGALURU-560027.
THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2(1), PRESENT ADDRESS JCIT (OSD), EXEMPTIONS, CIRCLE-1, 6TH FLOOR, UNITY BUILDING ANNEXE MISSION ROAD BENGALURU-560027. …APPELLANTS (BY SRI.SUSHAL TIWARI N., ADVOCATE)
AND:
SRI SRINIVASA EDUCATIONAL AND CHARITABLE TRUST NO.619/G, 2ND BLOCK, 36TH CROSS, RAJAJINAGAR, BENGALURU-560010. …RESPONDENT (BY SRI. VENKATESH. G.,AND SRI MAHESH KUMAR L, ADVOCATES)
THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE
Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN C.O.NO.88/BANG/2018 (IN ITA NO. 1142/BANG/2018) DATED 04/09/2019 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE JOINT COMMISSIONER OF INCOME-TAX, (OSD), EXEMPTIONS, CIRCLE-1, BENGALURU AND ETC.
THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA
ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)
Heard the learned counsel Sri. Sushal Tiwari. N., for appellants/Revenue and learned counsel Sri. Venkatesh. G., and Sri. Mahesh Kumar. L., learned counsel for the respondent/assessee.
The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 04.09.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in C.O.No.88/Bang/2018 (in ITA No.1142/Bang/2018) for the
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
assessment year 2008-09, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the order of CIT(A) whereby the CTA(A) had that assessee is entitled for exemption under section 11 of the Act even though the Trust applied its income for purpose other than those admissible under section 11(2)(b) read with section 11(5) by diverting to its trustees and other specified persons? 2. Whether on the facts and in the circumstances of the case, the Tribunal/CIT(A)’s orders can be said as perverse since both the authorities ignored the documentary evidences unearthed in search proceedings conducted in the case of asessee which established the fact that the income generated in the name of collection of capitalization/development fee has not been applied for its object? 3. Whether on the facts and in the circumstances of the case, the Tribunal and CIT(A) are correct in holding that assessee
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
is entitled to exemption under section 11 of the Act when both the authorities sustained addition of `25 crores for various reasons? 4. Whether on the facts and in the circumstances of the case, Tribunal and CIT(A) holding that assesse is entitled for exemption under section 11 of the Act by ignoring the evidences found in search relating to collecting of capitalization / development fees, paid commission @ `1,75,000/- to an agent for soliciting student which is surely not an object of Trust and by doing so, the assessee trust indulged into a commercial activity losing its exemption under section 11 of the Act? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that assessing authority is not correct in treating assessee as Company/AOP for purpose of computation of income and as such cannot be taxed by Maximum Marginal Rate when assessing authority has rightly done the same considering the commercial activities of the assessee and also for reason that
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
assessee has contravened provisions of claiming exemption? 6. Whether on the facts and in the circumstances of the case, the Tribunal and CIT(A) are right in law in holding that assessing authority is not correct in treating assessee as Company/AOP for purpose of computation of income and as such cannot be taxed at Maximum Marginal Rate when assessing authority has rightly done the same considering the commercial activities of the assessee and also for the reason that assessee has contravened provisions of c claiming exemption? 7. Whether on the facts and in the circumstances of the case, the Tribunal can CIT(A) are right in deleting additions of `703.00 lakhs and `554.50 lakhs made by assessing authority due to violation of section 13(1)(c) for A.Y.2012-13 to 2014-15 even when the assessing authority has established the said violation with documentary evidences found in search? 8. Whether on the facts and in the circumstances of the case, the Tribunal and CIT(A) are right in law deleting additions of
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
`93.00 lakhs for A.Y.2014-15, `4333 lakhs for A.Y 2013-14 and `476. lakhs for 2014- 15 relating to payment made for non- specified purpose in cash to Contractors, other related concerns, promoters etc., even though the same is in violation of section 13(1)(c) of the Act?”
Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.
On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.
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NC: 2024:KHC:41830-DB ITA No. 209 of 2020
In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the questions of law are kept open to be adjudicated in an appropriate proceeding.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (C.M. POONACHA) JUDGE
BS List No.: 4 Sl No.: 26