THE COMMISSIONER OF INCOME TAX V. M/S KURLON LTD

ITA/404/2008

AI Insights

The case revolves around an appeal by the Revenue against the decision of the ITAT, which had set aside the Commissioner of Income Tax's order that had remanded the assessment back to the Assessing Officer. The original assessment by the Assessing Officer had allowed certain deductions under Sections 80IA and 80HHC, which the Commissioner later contested, leading to a revisionary proceeding. The ITAT found that the Assessing Officer had adequately considered all relevant details and materials in the computation statement, thus restoring the original assessment and dismissing the Commissioner's order. The High Court, upon reviewing the matter, agreed with the ITAT's findings and dismissed the Revenue's appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 729006 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-07-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R B KRISHNA
• Assessee Lawyers: K V ARAVIND
• Keywords: Assessment; Deduction; Erroneous order; Income Tax; Prejudicial Interest; Revisionary proceedings
• Section: 263; 80HHC; 260A; 80IA(a)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 08TH DAY OF JULY 2014 PRESENT THE HON'BLE MR.JUSTICE N.KUMAR AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA No.404/2008 BETWEEN: 1. The Commissioner of Income Tax, C.R Building, Queens Road, Bangalore. 2. The Assistant Commissioner of Income Tax, Circle – 11(5), C.R. Building, Queens Road, Bangalore. …Appellants (By Sri.K.V.Aravind, Advocate) AND: M/s.Kurlon Ltd., No.47, Dickenson Road, Manipal Centre, North Block, III Floor, Bangalore. …Respondent (By Sri.R.B.Krishna, Advocate) 2 This ITA is filed U/s.260-A of I.T Act, 1961 arising out of order dated 31/10/2007 passed in ITA.No.486/Bang/2006, for the Assessment year 2001- 02, praying that this Hon’ble Court may be pleased to: i. formulate the substantial questions of law stated therein. ii. allow the appeal and set aside the order passed by the ITAT, Bangalore in ITA.No.486/Bang/2006, dated 31-10-2007 and confirm the order of the Appellate Commissioner and confirming the order passed by the Assistant Commissioner of Income Tax, Circle – 11(5), Bangalore, in the interest of justice and equity. This appeal coming on for Hearing this day, N.Kumar J., delivered the following: J U D G M E N T The Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) challenging the order passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘A’ (for short ‘the 3 Tribunal’), whereby the Tribunal set aside the order passed by the Commissioner of Income Tax, Bangalore passed in proceedings under Section 263 of the Act. 2. The Assessing Officer in the assessment order after setting out the facts and amounts under various heads restricted the benefit of provision of Sections 80IA(a) and 80HHC of the Act. The assessee was asked to comment on the proposed disallowance. The assessee did not give any reply. Therefore, the assessment order came to be passed restricting the claim under Section 80HHC. The assessee has no grievance, however, the Commissioner of Income Tax, by virtue of power conferred on him under Section 263 of the Act initiated revisionary proceedings. After hearing both the sides, he was of the view that in the computation statement certain expenses on account of raw material, power and fuel, stores and spares etc., were prorated at 63.3% and other expenses like, rent, 4 rates and taxes, insurance, advertisement etc., at 59.9%. There is no explanation offered for such differential treatment. The Assessing Officer has completed the assessment without making any enquiry about the correctness of the claim of the assessee. Therefore, set aside the assessment and remanded the matter to the Assessing Officer to reexamine the whole issue afresh and pass orders after giving adequate opportunity to the assessee. 3. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal on careful consideration of all the materials came to the conclusion that a perusal of the observations made by the Assessing Officer would indicate that he had, in fact, considered the entire details as found in the computation statement consisting of travelling and conveyance, advertisement, sales promotion, packing, transportation and freight, commission and sales and 5 penal charges. These were prorated over Bangalore and Bhuvaneswar units. A cursory perusal of the same would indicate that all the relevant expenses have been apportioned to Bangalore unit and the claim under Section 80IA has been made correctly. Therefore, the Tribunal found fault with the order passed by the Commissioner on the ground that the order passed by the Assessing Authority is neither erroneous nor prejudicial to the interest of the Revenue. Therefore, set aside the order passed by the Commissioner and restored the assessment order. Being aggrieved by the said order, the Revenue is before this Court in appeal. 4. This appeal was admitted to consider the following substantial question of law: Whether the Tribunal was correct in holding that the order of assessment computing deduction under Section 80IA of the Act was neither erroneous nor prejudicial to the interest of the Revenue as percentage of 6 expenditure adopted by the assessee from Bhuvaneshwar unit and Bangalore unit was permissible? 5. We have heard the learned counsel for both the parties. 6. From the aforesaid facts, it is clear that the Assessing Authority has taken into consideration all the details mentioned in the computation statement which is taken from the books of accounts maintained by the assessee and has recorded the finding. The Commissioner proceeds on the basis that the figures found in the calculation statement has no basis ignoring that these figures are taken from the books of accounts. In that view of the matter, the Tribunal was justified in setting aside the order passed by the Commissioner and restoring the order of the Assessing Authority. 7 7. Therefore, the substantial question of law is answered in favour of the assessee and against the Revenue. No merits. The appeal is dismissed. Sd/- JUDGE Sd/- JUDGE mpk/-* "