M/S GREEN ORCHARD FARM HOUSES V. DEPUTY COMMISSIONER OF INCOME TAX

ITA/75/2021

AI Insights

The case involves M/s. Green Orchard Farm Houses, a registered partnership firm, appealing against the order of the Income Tax Appellate Tribunal (ITAT) which confirmed the orders of the Appellate Commissioner and the Deputy Commissioner of Income Tax. The dispute centered on the taxation of income received under sale agreements and deeds that were later cancelled by an arbitration award. The appellant argued that the ITAT should have remanded the matter back to the A.O. for a proper examination of facts, particularly because new sale deeds were executed following the arbitration award. The respondents contended that the income was rightly taxed in the assessment year 2016-17, despite the cancellation of the original deeds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 765673 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-02-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: M V SESHACHALA; ARAVIND CHAVAN
• Keywords: Arbitration award; Assessment Year; Capital Gains; Income tax appeal; Sale deeds
• Section: 260-A

Judgement Text

" - 1 - ITA No.75 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF FEBRUARY, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR INCOME TAX APPEAL NO. 75 OF 2021 BETWEEN: M/S. GREEN ORCHARD FARM HOUSES REGISTERED PARTNERSHIP FIRM NO. 10/1, LAKSHMINARAYANA COMPLEX PALACE ROAD,BANGALORE-560 094 REP. BY ITS PARTNER SRI. ASHWIN PAI …APPELLANT (BY SHRI. M.V. SESHACHALA, SENIOR ADVOCATE FOR SHRI. ARAVIND V. CHAVAN, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -2(2) C.R.BUILDING, QUEENS ROAD BANGALORE-560 001 2. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE C.R.BUILDING, QUEENS ROAD BANGALORE-560 001 …RESPONDENTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA - 2 - ITA No.75 of 2021 BENGALURU IN ITA NO. 202/BANG/2020 DATED 22.10.2020 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER DATED 06.01.2020 BEARING ITA NO.12/CIT(A)-11/BNG/2014-2015 AND THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2), BENGALURU DATED 12.03.2014 FOR ASSESSMENT YEAR 2010-11 AND ETC. THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Assessee challenging the order dated 22.10.2020 in ITA No.202/Bang/2020 passed by the ITAT1, \"A\" Bench, Bangalore, though has been admitted to consider five questions of law. Shri M.V.Seshachala, learned Senior Advocate for the appellant and Shri E.I.Sanmathi, learned Standing Counsel for the respondents submit that only first question arises for consideration and it reads as follows: “Whether the Tribunal was justified in not setting aside and remanding the assessment order dated 12.03.2014 bringing to tax amount received under agreement to sale and sale deeds which was cancelled by the arbitration award dated 02.09.2015 and income arising under these deeds which were brought to tax in the assessment order dated 24.12.2018 for assessment year 2016-17? 2. Shri Seshachala submitted that assessee had entered into an agreement to sell 190 acres of land to 1 Income tax Appellate Tribunal, Bengaluru Bench - 3 - ITA No.75 of 2021 M/s Manipal University. It was executed three sale deeds on 03.06.2009, and another sale deed on 24.06.2009. Thereafter, there was a dispute between the parties and matter got resolved pursuant to the award passed in the arbitration proceedings. The said sale deeds were set-aside by Arbitral Tribunal and subsequently, three new sale deeds have been executed. Therefore, matter required examination of facts and hence the assessee has filed this appeal as the ITAT did not consider assessee’s request to remand the matter to the A.O.2 3. Shri Sanmathi, did not dispute the facts and submissions made by Shri Seshachala. However, he stated that a remand order may not be necessary because assessee has received consideration in the F.Y.3 2009-10 and it is liable to pay interest and penalty even though assessee has paid capital gains in the A.Y.4 2016-17. 4. We have carefully considered rival submissions and perused the records. 2 Assessing Officer 3 Financial Year 4 Assessment Year - 4 - ITA No.75 of 2021 5. Undisputed facts of the case are, sale deeds executed by the assessee have been set aside by the Arbitral Tribunal. Subsequently, three sale deeds have been executed. Assessee’s specific case is, it has offered and paid capital gains for the A.Y. 2016-17. The Revenue’s contention is that though assessee may have paid capital gains in the A.Y. 2016-17, it had received consideration in the A.Y.2009-10. Assessee sought for remand and the same was not considered by the ITAT. 6. Shri Sanmathi has not disputed the facts and submissions made by the learned Senior Advocate for the assessee. Although it is contended that money was received by the assessee in the year 2009-10, undoubtedly, it requires proper computation to decide as to whether assessee is liable to pay any tax, interest and penalty, keeping in view the assessment order for the A.Y. 2016-17. 7. In view of the above, in our opinion, the matter requires consideration in the hands of the A.O. Therefore, - 5 - ITA No.75 of 2021 the first question raised by the assessee merits consideration and hence, the following: ORDER i) Appeal is allowed; ii) Order dated 22.10.2020 in ITA No.202/Bang/2020 passed by the ITAT, ‘A’ Bench, Banglaore, is set aside; iii) The question of law is answered in favour of the Assessee and against the Revenue; iv) The matter is remitted to the file of A.O. for fresh consideration in accordance with law; v) All contentions of parties are kept open. No costs. Sd/- JUDGE Sd/- JUDGE YN List No.: 1 Sl No.: 55 "