Karnataka Financial Services Limited, Bangalore V. Assistant Commissioner Of Income Tax, Central Circle-V, Bangalore

MA 107/BANG/2023

AI Insights

The case involves M/s. Karnataka Financial Services Ltd., the appellant, contesting the levy of a surcharge of Rs.22,28,069 by the Assistant Commissioner of Income Tax, Central Circle V, Bangalore, for the block period 1986-87 to 1996-97. The surcharge was levied under section 113 of the Income Tax Act, which was amended by the Finance Act, 2002, to apply prospectively from 01.06.2002. The appellant argued that the surcharge should not apply to the block period in question as the relevant legal provisions were not in effect during that time. The Tribunal, referencing decisions from the Supreme Court, particularly the case of CIT vs. Vatika Township (P.) Ltd., agreed with the appellant's position and allowed the additional grounds, thereby setting aside the surcharge.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124385 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2023
• Assessment Year: misc
• Appeal Filed On: 03-05-2023
• Other Referred Cases: National Thermal Power Co. Ltd. Vs. CIT, Jute Corporation of India Ltd. Vs. CIT, CIT vs. Vatika Township (P.) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 107/Bang/2023 (in IT(SS)A No. 115/Bang/1997) Assessment Year : Block Period 1986-87 to 1996-97 M/s. Karnataka Financial Services Ltd., No. 29, Hospital Road, Bangalore. Vs. The Assistant Commissioner of Income Tax, Central Circle V, Bangalore. APPELLANT RESPONDENT Assessee by : Shri A. Shankar, Advocate Revenue by : Shri Pavan Kumar, Addl. CIT (DR) Date of Hearing : 02-06-2023 Date of Pronouncement : 06-06-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present miscellaneous petition is filed by assessee seeking some inadvertent mistakes that has crept in the order dated 09.11.2022. The Ld.Counsel submitted that this Tribunal has missed to adjudicate the additional ground that was raised with respect to validity of the levy of surcharge u/s. 113 of the act which was filed before this Tribunal on 23.02.2022. 2. We note that this particular ground raised by assessee by way of application for admission of additional ground dated Page 2 M.P. No. 107/Bang/2023 (in IT(SS)A No. 115/Bang/1997) 23.02.2022 has not been adjudicated in the impugned order dated 09.11.2022. 3. Accordingly, we rectify the said mistake by adjudicating the additional grounds raised by assessee in the application dated 23.02.2022 that reads as under: “30.1 Additional grounds of appeal ““1. Without prejudice, the learned Assessing Officer is not justified in levying surcharge under section 113 of the Act for the impugned block period when the provisions of the first proviso to section 113 of the Act was inserted by Finance Act, 2002 w.e.f 01.06.2002 is applicable prospectively and consequently no surcharge can be levied in the impugned assessment order on the facts and circumstances of the case. 2. The appellant craves leave of this Hon'ble Tribunal, to add, alter, delete, amend or substitute any or all of the above grounds of appeal as may be necessary at the time of hearing. 3. For these and other grounds that may be urged at the time of hearing of appeal, the appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity.” 30.2 It has been submitted that no new facts needs to be considered in order to dispose of the additional grounds raised by the assessee. It is submitted that, the additional grounds raised do not require verification of any new facts. The Ld.AR, thus prayed for the admission of additional grounds so raised by assessee. 30.3 On the contrary, the Ld.CIT.DR though opposed admission of the additional ground, could not bring anything on record which would challenge such a right available to assessee under the Act. Page 3 M.P. No. 107/Bang/2023 (in IT(SS)A No. 115/Bang/1997) We have perused the submissions advanced by both sides in light of records placed before us. 30.4 We note that the additional grounds are directly connected with the main issue of disallowance and no new facts needs to be investigated for adjudicating the same. Another issues alleged by the assessee is a legal issue that does not require investigation of any facts. 30.5 Considering the submissions and respectfully following the decisions of Hon’ble Supreme Court in case of National Thermal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 and Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688, we are admitting the additional grounds raised by the assessee. Accordingly, we admit the additional grounds raised by the assessee. 30.6 The Ld.Counsel submitted that assessing officer has levied surcharge of Rs.22,28,069/- by invoking provisions of section 113 of the act. He submitted that this provision is applicable w.e.f. 01.06.2002 and cannot be applied to the Block period 1986-87 to 1996-97 which is the period under consideration. He placed reliance on the decision of Hon’ble Supreme Court in case of CIT vs. Vatika Township (P.) Ltd. reported in (2014) 367 ITR 466. On the contrary, the Ld.DR though Page 4 M.P. No. 107/Bang/2023 (in IT(SS)A No. 115/Bang/1997) objected to the arguments of the Ld.Counsel, could not controvert his submissions on the applicability of the proviso to section 113 prospectively. We have perused the submissions advanced by both sides in the light of records placed before us. 30.7 We note that Hon’ble Supreme Court in case of CIT vs. Vatika Township (P.) Ltd. (supra) has held the operation of proviso to section 113 to be prospective in nature that was inserted by Finance Act, 2002 w.e.f. 01.06.2002. Hon’ble Supreme Court categorically noted that the charge in respect of surcharge was created for the first time by inserting the proviso to section 113 clearly is a substantive provision and hence is to be construed prospectively. Hon’ble Supreme Court further observed that the amendment neither purports to be merely clarifactory nor is there any material to suggest that it was intended by the Parliament to be retrospective in nature. Respectfully following this view of Hon’ble Supreme Court, we direct the Ld.AO not to levy surcharge by invoking provision to section 113 as the same is not applicable for the relevant block period under consideration. Accordingly, the additional grounds raised by assessee stands allowed.” Page 5 M.P. No. 107/Bang/2023 (in IT(SS)A No. 115/Bang/1997) 4. The additional ground adjudicated hereinabove shall be read in continuation to para 30 of the impugned order. 5. The rest of the contents of order dated 09/11/2022 passed by this Tribunal shall remain unchanged. In the result, the M.P. filed by the assessee stands allowed. Order pronounced in the open court on 06 th June, 2023. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 06 th June, 2023. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore