M/S PADMINI PRODUCTS(P) LTD V. THE DEPUTY COMMISSIONER OF INCOME TAX

ITA/530/2016

AI Insights

The case involves M/s. Padmini Products (P) Ltd., the appellant, contesting the orders of the Income Tax Appellate Tribunal (ITAT) for the assessment years 2004-05, 2010-11, and 2011-12. The primary legal issues revolved around the validity of notices issued under section 148 of the Income Tax Act without prior approval, the re-opening of assessments based on subsequent years' additions, and the eligibility of the appellant to claim depreciation based on actual costs versus written down values of transferred assets. The ITAT's decisions were challenged on grounds that they upheld actions which the appellant argued were not justified under the law.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 754749 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-10-2020
• Assessment Year: misc
• Other Referred Cases: ITA No.154/2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: CHYTHANYA
• Keywords: Actual cost; Assessment Year; Depreciation; Income Tax; Notice under section 148; Re-opening of assessment; Written down value; Successor firm; Explanation 3 to section 43(1)
• Section: 147; 148; 32(1); 43(1); 151(2); 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.530 OF 2016 BETWEEN: M/S. PADMINI PRODUCTS (P) LTD., NO.157, K. KAMARAJ ROAD, BENGALURU – 560 042 (REPRESENTED BY ITS DIRECTOR, SRI. PRABHU KIRAN, AGED ABOUT 62 YEARS, S/O LATE NAGARAJ N.VEMULKAR) …APPELLANT (BY SRI CHYTHANYA K.K, ADV.) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE – 12(2), BMTC BUILDING, 5TH BLOCK, KORAMANGALA, BANGALORE – 560095. …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) - - - 2 THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED: 05/08/2016 PASSED IN ITA NO.1444/BANG/2015, ITA NO.1445/BANG/2015 & ITA NO.1446/BANG/2015 FOR THE ASSESSMENT YEAR 2004-05, 2010-11 & 2011-12 PRAYING TO A) FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE. B) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE ITAT, BENGALURU ‘A’ BENCH BEARING IN ITA NO.1444/BANG/2015, ITA NO.1445/BANG/2015 & ITA NO.1446/BANG/2015 DATED:05/08/2016 FOR THE AYS 2004-05, 2010-11 & 2011-12. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr.Chythanya K.K, learned counsel for the assessee. Mr.K.V.Aravind, learned counsel for the revenue. 2. This appeal under Section 260-A 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 Years 2004-05, 2010-11 and 2011-12. The appeal was 3 admitted by a Bench of this Court vide order dated 01.02.2017 on the following substantial questions of law: I. Whether, in the facts and in the circumstances of the case, the ITAT is not justified upholding the action of the Respondent in issuing notice under section 148 without prior approval of the Learned Joint Commissioner of Income Tax as envisaged under section 151(2) of IT Act for the AY 2004-05? II. Whether, in the facts and in the circumstances of the case, the ITAT was right in law in upholding the action of Learned Respondent in re-opening the assessment for the assessment year 2004- 05 under Section 147 of the IT Act in the absence of any tangible material but merely on the basis of additions made in subsequent assessment year 2007-2008? III. Whether, in the facts and in the circumstances of the case, the ITAT was right in law in holding that the Appellant is eligible to claim depreciation only with reference to the written down value of transferred assets in the hands of predecessor firm and not with reference to actual cost incurred by it? IV. Whether, in the facts and in the circumstances of the case, the ITAT was right in law in upholding the action of the 4 Learned Respondent in invoking 5th proviso to Section 32(1) of the IT Act in the assessment years subsequent to the assessment year in which the succession took place i.e. for the AYs 2010-11 and 2011-12? V. Whether, in the facts and in the circumstances of the case, the ITAT was right in law in upholding the action of the Learned Commissioner Appeals in invoking Explanation 3 to section 43(1)? 3. When the matter was taken up today, learned counsel for the assessee submitted that the assessee does not want to press the substantial questions of law No. I and II framed in this appeal. However, all the contentions with regard to the aforesaid substantial questions of law may be kept open. It is further submitted that the substantial questions of law No. III, IV and V have already been answered by a Bench of this Court vide order dated 05.10.2020 in ITA No.154/2014. 4. The aforesaid submission could not be disputed by learned counsel for the revenue. 5 5. In view of aforesaid submissions and for the reasons assigned by us in the order dated 05.10.2020 passed in ITA No.154/2014, the substantial questions of law No. III, IV and V are answered in favour of the assessee and against the revenue. In the result, the order passed by the Income Tax Appellate Tribunal dated 05.08.2016 is hereby quashed. Accordingly, the appeal is allowed. Sd/- JUDGE Sd/- JUDGE dn/- CT-HR "