SMT DEEVA DEVI V. THE PRINCIPAL COMMISSIONER OF INCOME TAX-5

WP/3928/2018

AI Insights

The case involves Smt. Deeva Devi, the proprietrix of M/s Vaibhav Stores, who filed a writ petition against the Principal Commissioner of Income Tax-5 and the Income Tax Officer, challenging the disallowance of certain rent and interest payments under Section 40(a)(ia) of the Income Tax Act, 1961. The writ petition was filed under Articles 226 and 227 of the Constitution of India, seeking to quash an earlier order that upheld these disallowances. The court's decision emphasized the appropriateness of resolving such disputes through the appellate mechanism provided under the Income Tax Act, rather than through writ jurisdiction.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 697794 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-02-2018
• Assessment Year: misc
• Other Referred Cases: CIT (1) VS. Ansal Landmark Township Pvt Ltd., (2016) 73 taxmann.com 63 (SC), CIT Vs. M/s. Tide Water Marine INTL.Inc, CIT Vs. Shri Marikamba Transport co., (2015) 57 taxmann.com 273 (Karnataka)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: B P GANDHI
• Keywords: Assessment Order; Disallowance of rent; Income Tax; Revision petition; Writ petition
• Section: 143(3); 40(a)(ia); 264; 226; 227

Judgement Text

" 1/6 IN THE HIGH COURT OF KARNATAKA AT BENGALURU Dated this the 20th day of February, 2018 Before THE HON’BLE DR JUSTICE VINEET KOTHARI Writ Petition No.3928 of 2018 (T-IT) Between Smt. Deeva Devi W/o D. Chandanmal Aged 58 years Proprietrix M/s. Vaibhav Stores SRNG Complex, 1091 1st Floor, OTC Road Bangalore560002. ... Petitioner (By Mr. B.P. Gandhi, Advocate) And 1. The Principal Commissioner of Income Tax-5. Room No.538, 5th Floor 80 Feet Road, Koramangala Bangalore-560095. 2. The Income Tax Officer Ward 3(3), III Floor 80 Feet Road BMTC Building, Koramangala Bangalore-560 095. ... Respondents (By Mr. Jeevan J. Neeralgi, Advocate) **** Date of Order 20-02-2018 W.P.No.3928/2018 Smt. Deeva Devi Vs. The Principal Commissioner of Income Tax-5 & Anr.. 2/6 This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to quash the order Annexure-A file No.17 under Section 264 dated 14-11-2017 to the extent it upheld the disallowance of rent and declined to grant relief as per second proviso to Section 40(a)(ia) of ITAT & etc., This Writ Petition coming on for Preliminary Hearing this day, the Court made the following: O R D E R Mr. B.P. Gandhi, Advocate for Petitioner Mr. Jeevan J. Neeralgi, Advocate for Respondents 1. The present writ petition has been filed by the assessee petitioner, Smt. Deeva Devi, W/o.D. Chandanmal, proprietrix of M/s Vaibhav Stores, Bangalore, aggrieved by the order passed by the Respondent - Principal Commissioner of Income Tax-5, Bangalore vide Annexure A dated 14/11/2017 under Section 264 of the Income Tax Act, 1961 (‘Act’ for short) for AY 2012-13. 2. The reasons assigned by the Respondent - Principal Commissioner in his order dated 14/11/2017 are quoted below for ready reference:- Date of Order 20-02-2018 W.P.No.3928/2018 Smt. Deeva Devi Vs. The Principal Commissioner of Income Tax-5 & Anr.. 3/6 “9. So far as the assessee’s claim that Second proviso to Section 40(a)(ia) of the Income-tax Act, 1961 should be given retrospective effect is concerned, the Revenue has not accepted this view. An appeal filed against the decision of ITAT, Bengaluru Bench in the case of G. Shankar (supra) has been admitted by the Kalaburgi Bench of the Hon’ble High Court of Karnataka in File No.ITA- 200012/2-15 and the same is pending for disposal as on date. Besides, the SLPs filed by the Revenue against the decisions, which held that the Second proviso to Section 40(a)(ia) of the Income-tax Act, 1961 should be given retrospective effect, have been admitted by Supreme Court of India in several cases. One of such case is in the case of CIT (1) VS. Ansal Landmark Township Pvt Ltd., (2016) 73 taxmann.com 63 (SC). Many of such appeals of the revenue have been tagged with Civil Appeal No.1248/2016 before the Honourable Supreme Court in the case of CIT Vs. M/s. Tide Water Marine INTL.Inc. Thus the law in this respect is not settled and since the revenue has not accepted the decisions holding that the Second Proviso to Section 40(a)(ia) of the Income-tax Act, 1961 has to be given retrospective Date of Order 20-02-2018 W.P.No.3928/2018 Smt. Deeva Devi Vs. The Principal Commissioner of Income Tax-5 & Anr.. 4/6 effect, hence under the provisions of section u/s 264, the relief sought by the assassee in this regard cannot be granted. Hence I declined to interfere in this matter as sought FOR by the assessee. It may also be mentioned here that the decision in the case of Santosh Kumar Shetty (supra) is not in relation to the amendment under consideration in the current proceedings. 10. The next issue is disallowances of payment of interest:- In this respect, it is seen that the appellant have filed Form No.15G before the Assessing Office during the course of the assessment proceedings. The Honourable High court of Karnataka in its decision in the case of CIT Vs. Shri Marikamba Transport co., (2015) 57 taxmann.com 273 (Karnataka) has held that in case of payment made to sub-contractors, non filing of Form No.15G is only a technical defect and provisions of section 40(a)(ia) are not attracted in such cases. The ratio laid down by this decision is squarely applicable to the facts of this case. Hence, following the same, the assessee’s petition in this respect is accepted and the Assessing Officer is directed to delete the Date of Order 20-02-2018 W.P.No.3928/2018 Smt. Deeva Devi Vs. The Principal Commissioner of Income Tax-5 & Anr.. 5/6 disallowance of Rs.1,10,137/- made u/s 40(a)(ia) of the Income-tax Act, 1961. Sd/- (RAMESH NARAIN PARBAT) Principal Commissioner of Income tax Bengaluru-5, Bengaluru.” 3. Against the impugned assessment order Annexure D dated 28/02/2014 under Section 143 (3) of the Act, the assessee does not appear to have filed any regular appeal before the Commissioner of Income Tax (Appeals) as per the provisions of Section 246 of the Income Tax Act, 1961, but instead chose to file a Revision Petition under Section 264 of the Income Tax Act, 1961 on 20/02/2015 which came to be partly allowed by the Respondent Principal Commissioner of Income Tax as indicated above. 4. For the issues not decided by the learned Principal Commissioner, it is still open to the petitioner assessee to prefer a regular Appeal and the only objection regarding Date of Order 20-02-2018 W.P.No.3928/2018 Smt. Deeva Devi Vs. The Principal Commissioner of Income Tax-5 & Anr.. 6/6 expiry of limitation as that the period has expired for preferring such regular appeal, which may be an issue. 5. In the circumstances of the case, the present writ petition is therefore disposed of, relegating the petitioner assessee back to the appellate remedy before the learned Commissioner of Income Tax (Appeals) and if such first Appeal is filed before the learned CIT (Appeals) against the impugned assessment order dated 28/02/2014 within a period of 30 days from today, the same shall be entertained by the said Appellate Authority, without raising any objections on the ground of bar of limitation against the petitioner assessee, subject however to the assessee complying with the other conditions for entertaining such an appeal. 6. With these observations, the present writ petition stands disposed of. No costs. Sd/- JUDGE BMV* "