OFFICIAL LIQUIDATOR

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ITA No. 02 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JANUARY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO.2 OF 2020 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095. 2. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. …APPELLANTS (BY SRI. ARAVIND K V., SR. STANDING COUNSEL) AND: M/S COFFEE DAY ENTERPRISES LTD. NO.23/2, COFFEE DAY SQUARE, Digitally signed by RAMYA D Location: High Court of Karnataka

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ITA No. 02 of 2020 VITTAL MALLYA ROAD, BANGALORE - 560 001. PAN: AADCC 3995L …RESPONDENT (BY SRI. T. SURYANARAYANA SR. COUNSEL A/W SMT. TANMAYEE RAJKUMAR, ADVOCATES)

THE ITA / INCOME TAX APPEAL FIELD UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 10/06/2019 PASSED IN ITA NO. 2820/BANG/2018, FOR THE ASSESSMENT YEAR 2013-2014 PRAYING TO 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 2820/BANG/2018 DATED10/06/2019 FOR ASSESSMENT YEAR 2013-14 ANNEXURE-C AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), BENGALURU. 3. 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.

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING: ORDER

This appeal challenging the order dated 10.06.2019 in ITA No.2820/Bang/2018 dated 10.06.2019 passed by the

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ITA No. 02 of 2020 Income Tax Appellate Tribunal1, Bengaluru has to be admitted to consider the following questions of law: 1) "Whether on the facts and circumstances of the case and in law, Tribunal is right in law in setting aside disallowance made by assessing authority under Section 14A of the Act by holding that disallowance made voluntarily by the assessee will meet the requirements as set out in a Section 14A of the Act even though the conditions for invoking were satisfied in the case of the assessee"? 2) "Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in not distinguishing the law applicable for investment in stock in trade as laid out by the Supreme Court in the case of M/s Maxopp Investments Ltd 402 ITR 640 (SC)"? 3) "Whether on the facts and circumstances of the case and in law, Tribunal was right in not appreciating the fact that CBDT Circular No.5/2014 dated: 11.02.2014 has been in essence upheld by the Hon'ble Supreme Court and is binding law"? 2. Heard Shri. K.V. Aravind, learned Senior Standing Counsel for the Revenue and Shri. T. Suryanarayana, learned Senior Counsel for the assessee. 1 'ITAT' for short

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ITA No. 02 of 2020 3. Brief facts of the case are, assessee has made investment in M/s Mindtree Limited and earned dividend of Rs.2,05,44,489/- for AY 2013-14. The Assessing Officer2 applying Section 14A and Rule 8-D disallowed a total of sum of Rs.35,80,69,080/- Assessee preferred an appeal before the Commissioner of Income Tax (Appeals)3 and the said appeal has been dismissed. 4. The ITAT by the impugned order has held that the assessee has made a total disallowance of Rs.30.23 crores, which is more than the dividend of Rs.2.05 crores. Since, assessee has voluntarily made disallowance, it would meet the requirement of Section 14A of the Act and further disallowance made by the AO and confirmed by the CIT(A) is not warranted. 5. Shri. Aravind submitted that the view taken by the AO applying Rule 8-D is the correct position and therefore, the order passed by the ITAT is not sustainable. 2 'AO' for short 3 'CIT(A)' for short

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ITA No. 02 of 2020 6. Shri. T. Suryanarayana, submitted that the consistent view taken by the Court is, the Revenue is required to consider the investments made and the exemption of income earned there-from and this position of law is not disputed by the learned Senior Standing counsel for the Revenue. 7. In the instant case, the disallowance is Rs.30.23 crores and dividend amount is Rs.2.50 crores. As the disallowance is higher than interest earned, we find no error in the order passed by the ITAT.

Accordingly, this appeal is dismissed.

Questions of law are answered in favour of the assessee and against the Revenue.

No costs. Sd/- JUDGE Sd/- JUDGE LL List No.: 1 Sl No.: 80