Karnataka State Small Industries Development Corporation Limited V. The Assistant Commissioner of Income Tax, Circle 11 (3)

ITA/836/2007

AI Insights

The case involves the Karnataka State Small Industries Development Corporation Limited (appellant) appealing against the order of the Income Tax Appellate Tribunal (ITAT), Bangalore, which denied them the benefit under Section 10(20A) of the Income-tax Act, 1961. The appellant argued that as a government company under the Companies Act, 1956, it qualifies as an 'authority' for tax exemption purposes. However, the ITAT had previously ruled against this interpretation, a decision which the High Court of Karnataka upheld by referencing a similar case (ITA 1281/2006) where the same legal questions were addressed and decided against the appellant.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 794220 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 14-02-2014
• Assessment Year: misc
• Other Referred Cases: Mysore Paper Mills Ltd. vs. State of Karnataka
• Laws Referred To: Income-tax Act 1961, Companies Act 1956, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: MALAHARA; JENITH
• Keywords: Government company; Income tax appeal; Substantial questions of law; Authority Definition
• Section: 10(20A); 617; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 14th DAY OF FEBRUARY 2014 PRESENT THE HON’BLE MR. JUSTICE DILIP B BHOSALE AND THE HON’BLE MR. JUSTICE B MANOHAR ITA.NO.836/2007 BETWEEN M/S KARNATAKA STATE SMALL INDUSTRIES DEVELOPMENT CORPORATION LIMITED A.O.BUILDING, INDUSTRIAL ESTAE RAJAJINAGAR,, BANGALORE 560044 REP. BY ITS MANAGING DIRECTOR SRI.DR.RAJ KUMAR KHATRI AGED ABOUT 47 YEARS S/O LATE T.D. KHATRI ... APPELLANT (BY SRI MALAHARA, ADV., AND MISS JENITH, ADV., FOR SRI S PARTHASARATHI, ADV.,) AND THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11 (3) NO.14/3, RSHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE 560001 ... RESPONDENT (BY SRI K V ARAVIND, ADV.,) THIS I.T.A. FILED U/S.260-A OF I.T.ACT 1961 ARISING OUT OF ORDER DATED 13-07-2007 PASSED IN ITA NO. 271/BANG/2006 FOR THE ASSESSMENT YEAR 2002-03, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF 2 LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE BENCH-A, BANGALORE IN ITA NO.271/BANG/2006 DATED 13-07-2007, IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR HEARING, THIS DAY, Dilip B. Bhosale J. DELIVERED THE FOLLOWING: PC: The questions of law, as raised in the memorandum of appeal read thus: i. Whether the Appellant which is a company incorporated under the Companies Act, 1956 and a Government company as defined in Section 617 of the Companies Act, having 100% shareholding in the Corporation, falls within the definition of “authority” as per Section 10(20A) of the Income-tax Act? ii. Whether the Tribunal having accepted that the Appellant was an authority, can deny the benefit under Section 10(20A) of the Act only on the ground that it was not constituted under an enactment and whether for the purpose of Section 10(20A), a constitution under the provisions of Companies Act was not sufficient to satisfy the constitution under an enactment when the requirement of Section 10(20A) is Constitution by or under any law? iii. Whether the decision of the apex Court in the case of Mysore Paper Mills Ltd., a Government of Karnataka undertaking registered under the Companies Act, 1956 (a general law) holding the company as “an authority” within the meaning of Article 12 of 3 the Constitution of India and the company is nothing but a instrumentality and agency of the State Government and physical form of a company is merely a cloak or cover for the Government equally applied to the Appellant which is a 100% Government undertaking incorporated under the Companies Act, 1956?” 2. Learned counsel for the appellant-assessee fairly submits that in ITA No.1281/2006 before this Court (M/s.Karnataka State Small Industries Development Corporation Limited –vs- The Assistant Commissioner of Income Tax), decided on 03.09.2012, an identical substantial questions of law were raised and considered and they were answered against the assessee and in favour of the revenue. Therefore, in all fairness he submits that the questions as raised in the present appeal may also be answered against the assessee in terms of the Judgment dated 03.09.2012 in ITA 1281/2006. He further submits that one of us (B.Manohar J.) was party to the said Judgment. We have perused the said judgment and it was authored by one of us (B.Manohar J.). 4 3. Learned counsel appearing for the respondent also joins him in making such prayer. Hence, we answer all the three questions against the assessee and in favour of the revenue. The appeal is accordingly dismissed. No costs. Sd/- JUDGE Sd/- JUDGE TL "