PR COMMISSIONER OF INCOME TAX vs. SRI M R.PATTABHIRAM

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF MARCH 2021 PRESENT THE HON'BLE MR. JUSTICE ALOK ARADHE AND THE HON'BLE MR. JUSTICE ASHOK S. KINAGI I. T. A. NO.1 OF 2016 BETWEEN: M/S STANLEY LIFESTYLES LIMITED REP. BY ITS DIRECTOR SRI. SUNIL SURESH, NO. 12/7, SHAM RAO COMPOUND, MISSION ROAD, BANGALORE 560 027. ...APPELLANT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. JAYACHANDRAN, ADVOCATE) AND: PRINCIPAL COMMISSIONER OF INCOME TAX - 6 CR BUILDING, QUEENS ROAD, BANGALORE 560 001. ….RESPONDENT (BY SRI. K V ARAVIND, ADVOCATE)

2 THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX APPEAL ACT 1961, ARISING OUT OF ORDER DATED 14.08.2015 PASSED IN ITA No.608/BANG/2015, FOR THE ASSESSMENT YEAR 2010-11 PRAYING TO a) TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT. b) TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS, TO THE EXTENT AGAINST THE APPELLANT, IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU IN ITA No.608/BANG/2015 DATED 14.08.2015 RELATING TO ASSESSMENT YEAR 2010-2011. AND ETC. THIS ITA COMING ON FOR HEARING THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr. A.Shankar, learned Senior counsel along with Mr. Jayachandran, learned counsel for the assessee. Mr. K.V.Aravind, learned counsel for the Revenue.

3 2. This appeal under Section 260-A of the Income Tax Act, 1961, has been filed by the assessee against the judgment dated 14.08.2015 passed by the Income Tax Appellate Tribunal. The appeal pertains to the assessment year 2010-11. This appeal was admitted by a Bench of this Court vide order dated 03.01.2018, on the following substantial questions of law: "1. Whether the Tribunal erred in law in holding that the assessment order passed under Section 143(3) of the Act is erroneous and prejudicial to the interest of the revenue under Section 263 of the Act when the assessing officer had called for and examined the relevant details in the course of the assessment proceedings and consequently passed a perverse order on the facts and circumstances of the case? 2. Whether the Tribunal is justified in law in not appreciating that the appellant had sufficient interest-free funds to make

4 the interest-free advance to the group company and hence disallowance of interest on borrowed funds does not arise and consequently the assessment order passed by the assessing officer is not erroneous and prejudicial to the interest of the revenue on the facts and circumstances of the case? 3. Without prejudice, whether the Tribunal erred in law in holding that the assessment order was erroneous and prejudicial to the interest of revenue though the sum advanced to the group company was out of commercial expediency only as borne out by the material on record and thus no interest can be disallowed under any circumstance and consequently passed a perverse order on the facts and circumstances of the case?" 3. When the matter was taken up today, learned Senior counsel for the assessee fairly submitted that an order under Section 263 of the Act

5 was passed by the Commissioner of Income Tax on 19.03.2015 and the same has been given effect to by the Assessing Officer by an order dated 16.12.2016. It is further submitted that in view of the aforesaid subsequent development, the substantial questions of law in this appeal need not be answered, as the same have been rendered academic. 4. Learned counsel for the Revenue was unable to dispute the aforesaid submission. 5. In view of the order passed by the Assessing Officer on 16.12.2016 giving effect to the order passed under Section 263 of the Act by the Commissioner of Income Tax, we find that the substantial questions of law involved in this appeal are rendered academic.

6 6. In the result, it is not necessary for us to answer the same. Accordingly, the appeal is disposed. SD/- JUDGE SD/- JUDGE RD