THE COMMISSIONER OF INCOME TAX V. M/S BAGMANE DEVELOPERS PVT LTD

ITA/293/2014

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Deputy Commissioner of Income Tax against M/s Bagmane Developers Pvt Ltd concerning the assessment years 2009-10 and 2010-11. The primary contention was regarding the deletion of additions of substantial amounts (Rs.10,92,61,900/- for A.Y.2009-10 and Rs.16,42,32,367/- for A.Y.2010-11) by the tribunal, which were initially added by the Deputy Commissioner of Income Tax. The additions were related to advances made to related parties, which the tribunal found were for the purpose of purchasing and converting agricultural lands, thus not taxable. The appellants challenged the tribunal's decision, arguing that the advances were not used for business purposes. However, the court referenced a precedent where similar transactions were deemed to be for business purposes, leading to the dismissal of the appeal.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 728867 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-03-2015
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income tax versus Mangalam Publications and Services India private limited, Commissioner of Income Tax versus Harrison's Malayalam Ltd
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: K V ARAVIND
• Keywords: Advances; Business purposes; Commercial expediency; Income Tax; Interest disallowance; Related parties; Tribunal
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH 2015 PRESENT THE HON’BLE MR.JUSTICE VINEET SARAN AND THE HON’BLE MRS.JUSTICE S SUJATHA ITA NO.293 OF 2014 BETWEEN 1. THE COMMISSIONER OF INCOME TAX C R BUILDING QUEENS ROAD BANGALORE 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11(2) RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE ...APPELLANTS (BY SRI. K V ARAVIND, ADV., ) AND M/S BAGMANE DEVELOPERS PVT LTD LAKEVIEW BUILDING NO.66/1-4 A-BLOCK, 8TH FLOOR BAGMANE TECH PARK CV RAMAN NAGAR BANGALORE 560 093. ... RESPONDENT 2 THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:07/02/2014 PASSED IN ITA NO.1517/BANG/2013, FOR THE ASSESSMENT YEAR 2009-2010 PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.1517/BANG/2013 DATED:07/02/2014 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(2), BANGALORE. THIS APPEAL COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J., DELIVERED THE FOLLOWING: JUDGMENT The revenue has preferred this appeal against the order passed by the tribunal. The substantial questions of law that is raised in this appeal are as under: “Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that the Commissioner of income tax was justified in deleting the aforesaid additions of Rs.10,92,61,900/- and Rs.16,42,32,367/- for A.Y.2009-10 and 2010-11 respectively on the ground that the advances made to its related parties were for the purposes of purchase and conversion of agricultural lands without appreciating that no agricultural land were purchased by the related parties on behalf of the assessee 3 company and as such there was no evidence that these advances were for business purposes?” ii. “Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that in substance the Commissioner of Income Tax was not justified in confirming the disallowance was of interest of Rs.10,92,61,900/- and Rs.16,42,32,367/- for A.Y.2009-10 and 2010-11 respectively without appreciating the decisions of the Kerala High court in the cases of Commissioner of Income tax versus Mangalam Publications and Services India private limited reported in 2010 Vol. 324 ITR page 316 and Commissioner of Income Tax versus Harrison’s Malayalam Ltd reported in Vol 25 taxman. com page 546 (2012) relied on by the Commissioner of Income Tax”? iii. “Whether in the facts and circumstances of the case, the Tribunal is justified in law in holding that the interest-free loans given to assessee sister concerns and others was a measure of commercial expediency by relying on its own petition in the assessee’s own case on its own orders dated 7/11/2013 in 346 of 2012 and 1126 of 2011 for the A.Y.2007- 08 and 2008-09 respectively without appreciating that the orders dated 7/11/2013 have not become final”? 2. In fact, in the case of M/s Bagmane Constructions Pvt. Ltd. – the sister concern of the assessee, in a batch of appeals in ITA No.473/13 and 4 connected matters disposed off on 16.09.2014, this Court has held that the money given by M/s Bagmane Developers Pvt. Ltd to its sister concern for acquisition of land is for business purpose and has upheld the order of the tribunal. 3. In that view of the matter, this claim relating to interest on that advance is also not taxable and is an allowable expenditure. This is what the tribunal has held. Therefore, we do not see any merit in this appeal. No substantial question of law do arise for consideration in this appeal. Accordingly, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE JT/- "