COMMISSIONER OF INCOME TAX V. M/S MANIPAL FINANCE CORPORATION LTD.,

ITA/372/2013

AI Insights

This case involves an Income Tax Appeal by the Commissioner of Income Tax, Mangalore, and the Deputy Commissioner of Income Tax, Circle 1 Udupi, against Manipal Finance Corporation Ltd. The appeal was filed under Section 260-A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT), Bangalore, which had previously ruled that the principal portion of deposits and debentures forfeited by depositors and debenture holders is a capital receipt and not taxable. The Revenue's appeal was based on the contention that this income should be taxed as it was part of the normal business operations of the finance company. However, the court dismissed the appeal, referencing its earlier decisions in similar cases involving the same assessee for different assessment years, which had been upheld by the Supreme Court.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 728328 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-06-2023
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Lakshmi Vilas Bank Ltd., 220 ITR 305, CIT Vs. T V Sundaram Iyengar & Sons Ltd., 224 ITR 344
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JINITA CHATTERJEE
• Assessee Lawyers: E I SANMATHI
• Keywords: Capital receipt; Finance company; Income tax appeal; Principal Portion of Deposits and Debentures; Income Earned
• Section: 260-A

Judgement Text

"- 1 - NC: 2023:KHC:21934-DB ITA No. 372 of 2013 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JUNE, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO.372 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX, MANGALORE MANGALORE 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1 UDUPI …APPELLANTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) AND: M/s. MANIPAL FINANCE CORPORATION LTD., MANIPAL HOUSE MANIPAL-576 104 …RESPONDENT (BY Ms. JINITA CHATTERJEE, ADVOCATE FOR SHRI. S. PARTHASARATHI, ADVOCATE) THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12.03.2013 PASSED IN ITA NO.668/BANG/2012 FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.668/BANG/2012 DATED 12.03.2013 AND ORDER OF COMMISSIONER OF INCOME TAX, (APPEALS), MYSORE DATED 21.03.2012 IN ITA NO.15/UDP/CIT(A)MNG/2010-11. Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:21934-DB ITA No. 372 of 2013 THIS ITA IS COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Revenue challenging the order dated March 12, 2013 in ITA No.668/Bang/2012 for the A.Y.2008-09 has been admitted to consider following questions of law: (i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the principal portion of the deposits and debentures forfeited by the depositors and debenture holders is a capital receipt and hence not liable to tax? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that in the case of finance company the principal portion of deposit taken by the company and subsequently forgone by the depositors does not constitute income earned in the normal course of its business? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in not following the ratio of judgments of Hon'ble Supreme Court of India in the cases of CIT Vs. Lakshmi Vilas Bank Ltd., 220 ITR 305 and CIT Vs. T V Sundaram lyengar & Sons Ltd., 224 ITR 344? 2. Heard Shri E.I.Sanmathi, learned standing counsel for the Revenue and Ms.Jinita Chatterjee, learned advocate for the respondent-assessee. 3. At the outset, Ms.Jinita Chatterjee, submits that all issues raised in this appeal are covered in favour of - 3 - NC: 2023:KHC:21934-DB ITA No. 372 of 2013 the assessee and against the Revenue by the decision of this court in assessee’s own case for different assessment year in ITAs No.794 & 795 of 2008 and SLP No.15037/2015 filed by the Revenue challenging the said order has also been dismissed. Her submission is placed on record. 4. Shri Sanmathi, in his usual fairness, does not dispute the above submission. 5. In view of the above, the following; ORDER (i) Appeal is dismissed; (ii) Questions of law are answered in favour of the assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE AV List No.: 1 Sl No.: 8 "