PR. COMMISSIONER OF INCOME TAX-2 V. M/S KARNATAKA STATE POLICE HOUSING AND

ITA/499/2022

AI Insights

This case involves an Income Tax Appeal by the Revenue against M/s Karnataka State Police Housing and Infrastructure Development Corporation Ltd. (KSPHC), concerning the taxability of interest earned on government assets for the assessment year 2012-2013. The Revenue challenged the decision of the Income Tax Appellate Tribunal, which had ruled in favor of the respondent, KSPHC. The Revenue's appeal was based on the grounds that the Tribunal's decision was perverse and that the interest earned on grants from the state government should be considered taxable income. However, the High Court found that the questions raised by the Revenue did not pertain to the facts of the case as they were not part of the original dispute or the Tribunal's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 727857 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-01-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ASHOK KULAKARNI
• Assessee Lawyers: SANMATHI I; DILIP
• Keywords: Income tax appeal; Interest on Government Assets; Tax Exemption; Grants from State Government
• Section: 56; 260-A

Judgement Text

" - 1 - NC: 2025:KHC:2114-DB ITA No. 499 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF JANUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 499 OF 2022 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-2, BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-4(3)(1), BMTC BUILDING, KORAMANGALA, BANGALORE-95. …APPELLANTS (BY SRI. SANMATHI E I., ADVOCATE AND SRI. DILIP M., ADVOCATE) AND: M/S KARNATAKA STATE POLICE HOUSING AND INFRASTRUCRTURE DEVELOPMENT CORPORATION LTD., (KSPHC) NO.59, RICHMOND ROAD, BENGALURU-560 025. PAN:AAACK6902E, …RESPONDENT (BY SRI. ASHOK A KULAKARNI.,ADVOCATE) THIS ITA/INCOME TAX APPEAL UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 25/11/2021 PASSED IN ITA NO.142/BANG/2020, FOR THE ASSESSMENT YEAR 2012-2013, PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HONBLE COURT AS DEEMED FIT AND (2) SET ASIDE THE APPELLATE ORDER DATED 25/11/2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS NO. ITA NO.142/BANG/2020 (ANNEXURE-‘A’) Digitally signed by SHARADA VANI B Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:2114-DB ITA No. 499 of 2022 FOR ASSESSMENT YEAR 2012-2013 AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, INTEREST OF JUSTICE. THIS ITA, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE G BASAVARAJA ORAL JUDGEMENT (PER: HON'BLE MR JUSTICE KRISHNA S DIXIT) The appeal is preferred by the Revenue by framing the following questions as the Substantial Questions of Law: 1. \"Whether on the facts and circumstances of the case and in law, the Tribunal's order can be said as perverse in nature in holding that interest earned by the assessee on the Government assets is not taxable u/s 56 of the Income Tax Act, 1961\" 2. \"Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not appreciating the fact that the order dated 05.01.2012 issued by the Government of Karnataka directing that interest earned on the grants received from State Government should not be treated as income of the corporation was issued on the behest of the DGP & CMD of KSPHC vide their letter dated 29.11.2011 and therefore was an afterthought to avoid paying taxes, hence the issue was detected by the Revenue\"? - 3 - NC: 2025:KHC:2114-DB ITA No. 499 of 2022 3. 'Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not appreciating that a self-serving order of the State Government Issued on the behest of DGP & CMD of the assessee company, while no such order or condition was attached at the time of receipt of funds by the assessee company, is bad in law and cannot over rule the provisions of Section 56 of the Income Tax Act, 1961\"?. 2. Learned counsel appearing for the Assessee submits and we agree that these questions do not crop up in the fact matrix of appeal in question and the order which is impugned. In the above circumstances, this appeal is liable to be and accordingly rejected, costs having been made easy. Sd/- (KRISHNA S DIXIT) JUDGE Sd/- (G BASAVARAJA) JUDGE cbc List No.: 2 Sl No.: 0 "