THE COMMISSIONER OF INCOME TAX V. M/S KHODAY INDIA LTD

ITA/240/2009

AI Insights

The case involves an appeal by the Commissioner of Income-Tax and the Assistant Commissioner of Income-Tax against M/s. Khoday India Ltd., concerning the assessment year 2003-04. The appeal was directed against the order of the Income Tax Appellate Tribunal (ITAT), which had dismissed the revenue's appeal and granted relief to the assessee. The main issues revolved around the reasonableness of payments made to sister concerns and the deductibility of belated payments to provident fund and ESI under various sections of the Income Tax Act, 1961. The High Court of Karnataka, referencing previous judgments and the specifics of the case, upheld the ITAT's decision.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 742860 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-01-2015
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME-TAX VS. SPECTRUM CONSULTANTS INDIA (P) LTD.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S SUKUMAR
• Assessee Lawyers: K V ARAVIND
• Keywords: Assessment year 2003-04; Excessive payment; Income tax appeal; Lease rental; Provident fund; ESI Deduction
• Section: 43B; 36(1)(va); 2(24)(x); 40A(2)(a); 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JANUARY, 2015 PRESENT THE HON' BLE MR. JUSTICE N. KUMAR AND THE HON' BLE MR. JUSTICE B. VEERAPPA INCOME TAX APPEAL No.240/2009 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX C.R. BUILDING QUEENS ROAD BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1) C.R. BUILDING QUEENS ROAD BANGALORE. .. APPELLANTS (BY SRI K V ARAVIND, ADV.) AND: M/S. KHODAY INDIA LTD., No.54, KANNAYAAKANA AGRAHARA ANJANAPURA POST BANGALORE. ... RESPONDENT BY SRI S. SUKUMAR, ADV.) 2 THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 12.12.2008, PASSED IN ITA NO.338/BNG/2008, FOR THE ASSESSMENT YEAR 2003-04, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT BANGALORE IN ITA No.338/BNG/2008, DATED 12-12-2008, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR HEARING THIS DAY, N. KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT The revenue has preferred this appeal against the order passed by the Tribunal dismissing the appeal preferred by it and granting relief to the assessee. 2. Three substantial questions of law arise for consideration in this appeal, which are as under: “1. Whether the Appellate Authorities were correct in holding that a sum of 3 Rs.1,32,00,000/- paid to M/s. Khoday Breweries Ltd., and Rs.63,60,000/- paid to M/s. United Glass Bottles Manufacturing Co., in all a sum of Rs.1,95,60,000/- paid to sister concerns was not unreasonable and excessive as per Section 40A(2)a) of the Act? 2. Whether the Appellate Authorities were correct in merely following the view expressed in the earlier assessment years without independently examined the criteria fixed in 40A(2)(a) of the Act for purpose of allowing lease rental and consequently recorded a perverse finding? 3. Whether the Appellate Authorities were correct in holding that the belated payment of employees contribution to provident fund and ESI would be an allowable deduction in view of Section 43B of the Act and the provisions of Section 36(1)(va) r.w.s.2(24)(x) of the Act are not applicable?” 4 3. Insofar as the question Nos.1 and 2 are concerned, they fell for consideration in the very same assessee’s case in ITA No.120/2003 decided on 15.03.2010 and the said issues are answered in favour of the assessee and against the revenue. Following the aforesaid judgment, the said substantial questions of law are answered in favour of the assessee and against the revenue. 4. Insofar as the 3rd substantial question is concerned, the said question fell for consideration before this Court in the case of COMMISSIONER OF INCOME-TAX VS. SPECTRUM CONSULTANTS INDIA (P) LTD., reported in (2014) 266 CTR (Kar) 241: (2014) 100 DTR (Kar) 129, where the substantial question was answered in favour of the assessee and against the revenue. Following the said judgment, the 3rd substantial question of law is answered in favour of the 5 assessee and against the revenue. In that view of the matter, we do not see any merit in this appeal. 5. Accordingly, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE Sbs* "