M/s Karnataka Power Corporation Limited, Bangalore V. ACIT, Bangalore

ITA 462/BANG/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7350 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Keywords: Principle of natural justice; Set aside
• Section: 40(a)(ia); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.462/BANG/2014 ASSESSMENT YEAR : 2009-10 M/S KARNATAKA POWER CORPORATION LTD., SHAKTHI BHAVAN, NO.82, RACE COURSE ROAD, BENGALURU-560 001. PAN AAACK 8032 D. VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-11(5), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI C.H SUNDAR RAO, CIT DATE OF HEARING : 23.04.2019 DATE OF PRONOUNCEMENT : 03.05.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 24/12/2013 PASSED BY THE CIT (A)-1, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, ASSESSEE HAS RAISED 9 GROUNDS OF APPEAL. GROUNDS NO.1, 2, 8 AND 9 ARE GENERAL IN NATURE. GR OUND NO.7 IS CONSEQUENTIAL IN NATURE. REMAINING GROUNDS (3,4,5, 6) RELATE TO THE FOLLOWING ISSUES:- ITA NO.462/BANG/2014 PAGE 2 OF 5 (A) DISALLOWANCE U/S 40(A)(IA) OF THE ACT. (B) DISALLOWANCE U/S 37 OF ROC CHARGES PAID FOR INCREASE OF AUTHORIZED CAPITAL (C) DISALLOWANCE OF PRIOR PERIOD EXPENSES. 3. THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING AND IS ENGAGED IN THE BUSINESS OF POWER GENERATION. 4. THE FIRST ISSUE RELATES TO THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. THE ASSESSEE PAID A SUM OF RS.9,00,788/- TO M/S OCCUPATION HEALTH SERVICES WI THOUT DEDUCTING TAX AT SOURCE. HENCE THE AO DISALLOWED T HE SAME U/S 40(A)(IA) OF THE ACT. BEFORE THE LD CIT(A), TH E PAYEE HAS OFFERED THE SAME AS ITS INCOME AND HENCE THE BENEFI TS OF PROVISO TO SEC. 40(A)(IA) MAY BE GIVEN. SINCE THE ASSESSEE DID NOT PROVE THE SAID SUBMISSIONS, THE LD CIT(A) C ONFIRMED THE DISALLOWANCE. 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. IN OUR VIEW, IN THE INTEREST OF NATURAL JUSTICE, THE ASSES SEE MAY BE PROVIDED WITH AN OPPORTUNITY TO SUBSTANTIATE ITS CL AIM. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT (A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH. ITA NO.462/BANG/2014 PAGE 3 OF 5 6. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF ROC CHARGES PAID FOR INCREASE OF AUTHORISED CAPITAL. W E NOTICE THAT THE LD CIT(A) HAS CONFIRMED THE DISALLOWANCE B Y FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN T HE CASE OF BROOK BOND LTD (255 ITR 798). HENCE WE DO NOT F IND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT (A) ON THIS ISSUE. THE ASSESSEE HAS ALSO MADE AN ALTERNATIVE C LAIM THAT THIS EXPENDITURE SHOULD BE ALLOWED IN TERMS OF SEC. 35D OF THE ACT. HOWEVER, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS PRESCRIBED IN SEC.35D AND ACCORDINGLY REJECT THE ALTERNATIVE CLAIM ALSO. 7. THE NEXT ISSUE RELATES TO DISALLOWANCE OF PRI OR PERIOD EXPENSES. THE AO NOTICED THAT THE ASSESSEE HAS CLAI MED CERTAIN EXPENSES, WHICH WERE FOUND TO BE RELATED TO EARLIER YEAR. BEFORE THE AO, THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO SHOW THAT THOSE EXPENSES, THOUGH RELATE D TO EARLIER PERIOD, ACTUALLY GOT CRYSTALLIZED DURING TH E YEAR UNDER CONSIDERATION. HENCE THE AO DISALLOWED A SUM OF RS .499.39 LAKHS AS PRIOR PERIOD EXPENSES. THE LD CIT(A) EXAM INED THE DETAILS OF EACH OF THE EXPENSES AND GAVE RELIEF OF RS.308.70 LAKHS. REMAINING AMOUNT OF DISALLOWANCE WAS CONFIR MED BY LD CIT(A), SINCE THE ASSESSEE COULD NOT PROVE THAT THEY GOT CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. 8. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. WE NOTICE THAT THE ASSESSEE DID NOT FURNIS H ANY ITA NO.462/BANG/2014 PAGE 4 OF 5 DETAILS TO CONTROVERT THE FINDINGS GIVEN BY LD CIT( A) ON THIS ISSUE. ACCORDINGLY WE CONFIRM THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY, 2019. SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, MAY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.462/BANG/2014 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..