TESCO HINDUSTAN WHOLESALING PVT. LTD.

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JUNE 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.75 OF 2015 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD, BANGALORE. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(1), RASHTROTHANA BHAVAN, NRUPATHUNGA ROAD, BANGALORE-560 001. ...APPELLANTS (BY SRI K.V. ARAVIND, ADVOCATE) AND:

M/S. ALLIANCE INFRASTRUCTURE PROJECTS PVT. LTD., NO.85, KARTHIK NAGAR, MARATHAHALLI, K R PURAM, OUTER RING ROAD, BANGALORE-560 037, PAN: AAFCA0404J. ...RESPONDENT

2 (BY SRI A. SHANKAR, SENIOR COUNSEL FOR SRI M. LAVA, ADVOCATE) - - - THIS I.T.A. IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12.09.2014 PASSED IN ITA NO.234/BANG/2013 FOR THE ASSESSMENT YEAR 2010-2011, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO.234/BANG/2013 DATED 12.09.2014 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), BANGALORE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr.K.V.Aravind, learned counsel for the revenue. Mr.A. Shankar, learned senior counsel for the assessee. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue against the order dated 12.09.2014 passed by the Income Tax Appellate Tribunal, Bangalore. The subject matter of the appeal pertains to the Assessment year 2009-10 and 2010-2011. The appeal was admitted by a

3 bench of this Court vide order dated 18.12.2015 on the following substantial questions of law: "a) Whether the Tribunal was correct in deleting the disallowance u/s 14A r.w.r.8D(2)(ii) and 8D(iii) in respect of investments in assets yielding tax free income, holding that the provisions of section 14A cannot be invoked unless and until there is a receipt of exempted income for the concerned assessment year without appreciating the provisions of section 14A read with Rule 8D(2)(ii) in its true sense and right spirit and the fact that when the interest expense incurred cannot be directly attributed to any particular income or receipts, provisions of Rule 8D (2) (ii) are automatically applicable ? b) Whether the Tribunal was correct in considering the Board's circular No.5/2014 dated 11.02.2014 which has made it clear that the disallowance u/s 14A r.w.r. 8D has to be made even where the tax payer in a particular year has not earned any exempted vis-a-vis dividend income?"

The facts leading to filing of this appeal briefly stated are that the assessee is a Private Limited Company engaged in the business of real estate and construction activities. The assessee while filing the return of income tax for the assessment years 2009-2010 and 2010-2011

4 declared the income of Rs.55,45,092/- and Rs.8,07,253/-. The Assessing Officer passed assessment order under Section 143(3) of the Act dated 12.03.2012 and made disallowance of Rs.31,47,183/- for the assessment year 2009-2010 and Rs.44,82,527/- respectively under Section 14A of the Act.

The assessee thereupon filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The Assessing Officer by order dated 10.06.2013 partly allowed the appeal by deleting the disallowance of Rs.2,77,65,949/- under Section 14A read with 8D(ii) of the Act and upheld the disallowance of Rs.44,82,527/-.

The assessee as well as the revenue filed appeals against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] before the Tribunal. The Tribunal vide order dated 12.09.2014 allowed the appeal preferred by the assessee and dismissed the appeal preferred by the Revenue.

The learned senior counsel for the respondent

5 submitted that the substantial questions of law involved in this appeal have been answered in favour of the assessee by this Court vide judgment dated 15.02.2021 passed in I.T.A.No.133/2015 viz., THE COMMISSIONER OF INCOME TAX Vs. M/S QUEST GLOBAL ENGINEERING SERVICES PVT. LTD.

The aforesaid submission has not been disputed by the learned counsel for the revenue.

In view of submissions and the for the reasons assigned in the judgment dated 15.02.2021 in ITA No.133/2015, THE COMMISSIONER OF INCOME TAX Vs. M/S QUEST GLOBAL ENGINEERING SERVICES PVT. LTD. (supra), the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue. In the result, appeal is dismissed. Sd/- JUDGE

Sd/- JUDGE HR