M/S MANYATA PROMOTERS PVT. LTD., V. THE DEPUTY COMMISSIONER OF INCOME-TAX

ITA/452/2014

AI Insights

The case involves M/s. Manyata Promoters Pvt. Ltd., the appellant, contesting an order by the ITAT which upheld the applicability of Section 14A read with Rule 8D of the Income Tax Act, 1961, for the assessment year 2009-10. The primary contention was regarding the invocation of these provisions for computing book profits under Section 115JB(2), particularly in cases where no exempt income was earned, and the conditions for invoking Section 14A read with Rule 8D were allegedly not met. The High Court of Karnataka, after considering the substantial questions of law, ruled in favor of the appellant, leading to the quashing of the ITAT's order.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 726770 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-01-2021
• Assessment Year: misc
• Other Referred Cases: I.T.A.No.203/2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: SUSHMA RAVINDRA
• Keywords: Assessment Year 2009-10; Book Profits; Exempt income; Income Tax; Rule 8D; Section 14A
• Section: 14A; 8D; 115JB(2); 260-A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JANUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE V. SRISHANANDA I.T.A. NO.452 OF 2014 BETWEEN: M/S. MANYATA PROMOTERS PVT. LTD. CLASSIC COURT, 1ST FLOOR 9/1, RICHMOND ROAD BANGALORE - 560 025 (REPRESENTED BY ITS DIRECTOR P R RAMAKRISHNAN AGED ABOUT 62 YEARS S/O SRI. P.V. RAJAGOPALAN). ... APPELLANT (BY MRS. SUSHMA RAVINDRA, ADV., FOR MR. K.K. CHYTHANYA, ADV.,) AND: THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE - 2(2) C.R. BUILDINGS, QUEENS ROAD BANGALORE - 560 001. ... RESPONDENT (BY MR. K.V. ARAVIND, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 13.06.2014 PASSED IN ITA NO.1616/BANG/2012 FOR THE ASSESSMENT YEAR 2009-10, PRAYING TO: 2 (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER (TO THE EXTENT PREJUDICIAL) OF THE INCOME TAX APPELLATE TRIBUNAL BEARING ITA NOS.1616/BANG/2012 DATED 13.06.2014 FOR THE ASSESSMENT YEAR 2009-10. THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2009-10. The appeal was admitted by a bench of this Court vide order dated 31.03.2015 on the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the Honourable ITAT, Bangalore Bench is right in law in upholding applicability of Section 14A r.w. Rule 8D in a case where the book profits shall be deemed to be total income as per Section 115JB(2)? (ii) Whether on the facts and in the circumstances of the case, the Honourable 3 ITAT, Bangalore Bench is right in law in upholding invocation of Section 14A r.w. Rule 8D for the purpose of Explanation (f) below Section 115JB(2) while computing book profits? (iii) Whether on the facts and in the circumstances of the case, the Honourable ITAT, Bangalore Bench, justified in law in upholding the disallowance under Section 14A r.w. Rule 8D when the conditions for invoking Section 14A read with Rule 8D did not exist in the instant case? (iv) Whether on the facts and in the circumstances of the case, the Honourable ITAT, Bangalore Bench justified in law in upholding invocation of Section 14A r.w. Rule 8D when the owned funds far exceeded the funds invested in exempt securities? (v) Whether on the facts and in the circumstances of the case, the Honourable ITAT, Bangalore Bench justified in law in upholding invocation of Section 14A r.w. Rule 8D even when the disallowance exceeded the 4 exempt income? (vi) Whether on the facts and in the circumstances of the case, Honourable ITAT, Bangalore Bench justified in law in upholding invocation of Section 14A r.w. Rule 8D even when no exempt income was earned? 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.203/2015, the substantial questions of law framed by a bench of this court are answered in favour of the assessee and against the revenue. The order passed by the tribunal dated 13.06.2014 insofar as it pertains to the findings recorded against the assessee is hereby quashed. In the result, the appeal is allowed. Sd/- JUDGE Sd/- JUDGE ss "