PR. COMMISSIONER OF INCOME TAX V. M/S THE COMMERCIAL CORPORATION OF INDIA LTD.,

ITA/128/2020

AI Insights

The case involves an appeal by the Revenue against the order of the Income Tax Appellate Tribunal, which allowed the appeal of the assessee, M/s. The Commercial Corporation of India Ltd., by setting aside the disallowance of depreciation claimed on sale/lease back transactions. The Tribunal had found that the assessing authority did not prove that the depreciation claimed was false. The Revenue challenged this decision, arguing that the depreciation claim was bogus based on materials like statements of independent witnesses and conduct of the assessee during a search. The High Court of Karnataka, considering the tax effect and the Circulars issued by the Central Board of Direct Taxes, decided to dispose of the appeal with liberty to the Revenue to revive it under certain exceptions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 738033 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-09-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI
• Assessee Lawyers: SANMATHI
• Keywords: Bogus claim; Circulars; Depreciation; Income tax appeal; Tax effect; Tax effect; Sale/Lease Back Transactions
• Section: 260-A

Judgement Text

" - 1 - NC: 2024:KHC:39714-DB ITA No. 128 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 128 OF 2020 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX ATTAVARA, MANGALORE. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, UDUPI. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.) AND: M/S. THE COMMERCIAL CORPORATION OF INDIA LTD., MANIPAL - 576 104. …RESPONDENT (BY SRI S PARTHASARATHI, ADV.) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/02/2020 PASSED IN IT(SS)A NO.7/BANG/2011, FOR THE ASSESSMENT YEAR/BLOCK PERIOD 01/04/1987 TO 21/01/1997, PRAYING TO 1. DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND ETC. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:39714-DB ITA No. 128 of 2020 CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.S.Parthasarathi for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 28.02.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(SS)A.No.7/Bang/2011 for the Block period from 01.04.1987 to 21.01.1997. 3. This Court, admitted the appeal on 29.09.2020 to consider the following substantial question of law: “Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as the Tribunal has - 3 - NC: 2024:KHC:39714-DB ITA No. 128 of 2020 allowing the appeal of the assessee by setting aside the disallowance of depreciation of Rs.2,02,86,787 claimed on sale/lease back transactions by holding that the assessing authority has not made any statement that the depreciation claimed by the assessee is false claim in respect of transactions with six number of companies when the assessing authority rightly concluded the findings by holding that claim made by assessee with regard to depreciation is bogus one by relying valuable materials brought on record like statements of independent witnesses recorded during the course of search and conduct of the assessee?” 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under - 4 - NC: 2024:KHC:39714-DB ITA No. 128 of 2020 the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MPK CT:bms List No.: 2 Sl No.: 21.1 "