THE COMMISSIONER OF INCOME TAX V. M/S KARNATAKA POWER TRANSMISSION

ITA/730/2007

AI Insights

The case involves the Commissioner of Income-Tax and the Income Tax Officer as appellants against M/s. Karnataka Power Transmission Corporation Ltd. as the respondent. The appeal was filed under Section 260A of the Income Tax Act, 1961, challenging the orders of the Income Tax Appellate Tribunal which had set aside the earlier order by the Commissioner of Income-Tax (Appeals). The primary legal contention revolves around the treatment of a provision for doubtful debts amounting to Rs.116,15,14,951, and whether it should be treated as a reserve under clause b to Explanation 1 of Section 115JB(2) of the Act. The Tribunal's decision was influenced by interpretations of similar provisions in previous cases, which the appellants argued were affected by the retrospective amendment to Section 115JA.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 701044 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-02-2014
• Assessment Year: misc
• Other Referred Cases: CIT vs. Saran Engineering 161 ITR 761, State Bank of Patiala vs. CIT 219 ITR 706, JCIT vs USHA MARTIN INDUSTRIES special Bench Tribunal Kolkata, 104 ITD 249, CIT vs Eicher Ltd.
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI; MALLAH A RAO K
• Assessee Lawyers: K V ARAVIND
• Keywords: Assessment Year 2002-03; Income Tax; Provision for Doubtful Debts; Retrospective amendment
• Section: 115JB(2); 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 11TH DAY OF FEBRUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA NO.730/2007 BETWEEN: 1. The Commissioner of Income-Tax, C.R Building, Queens Road, Bangalore. 2. The Income Tax Officer, Ward -11(2), C.R Building, Queens Road, Bangalore. …Appellants (By Sri.K.V.Aravind, Advocate) AND: M/s.Karnataka Power Transmission Corporation Ltd., Cauvery Bhavan, K.G.Road, Bangalore – 560 009. …. Respondent (By Sri.S.Parthasarathi, Adv. a/w Sri.Mallaharao.K., Adv) 2 This ITA is filed under Sec.260-A of Income Tax Act 1961, arising out of Order dated 11/05/2007 passed in ITA No.457/BNG/2006 and the Misc.Petition.No.80/BNG/2007 dated 13.08.2007, for the Assessment Year 2002-03, 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.457/BNG/2006 dated 11/05/2007 and the Misc.Petition.No.80/BNG/2007 dated 13.08.2007, confirm the orders of the Income Tax Officer, Ward-11(2), Bangalore This appeal coming on for hearing this day, B.MANOHAR.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’) being aggrieved by the order dated 11-05-2007 made in ITA No.457/Bang/2006 and order dated 13-08-2007 made in M.P. No.80/2007 passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘B’ 3 (for short ‘the Tribunal’) for the assessment year 2002-03, wherein the Tribunal set aside the order dated 24-03-2006 passed by the Commissioner of Income-Tax (Appeals)-I, partly granting the relief to the assessee. 2 This appeal was admitted for considering the following substantial questions of law: “1. Whether the Tribunal was correct in holding that a sum of Rs.116,15,14,951/- reflected by the assessee as provision for doubtful debts cannot be treated as the reserve and added back as per clause b to Explanation 1 of Section 115JB(2) of the Act, (under whatever name called) in accordance with the Judgment of the Apex Court in CIT vs. Saran Engineering 161 ITR 761 and in State Bank of Patiala vs. CIT 219 ITR 706? 2. Whether the Tribunal was correct in holding that the provision for bad and doubt debts cannot be added back as held by the assessing officer and confirmed by the appellate commissioner by relying on JCIT vs USHA MARTIN INDUSTRIES special Bench Tribunal Kolkata, 104 ITD 249 and CIT vas Eicher Ltd., when these Judgments were interpreting Explanation 1(c) of Section 115JB(2) of the Act and not Explanation 1(b) of Section 115JB(2) of the Act, which arises in the facts of the present case? 4 3. Learned counsel appearing for the Revenue submitted that Section 115JA has been amended vide Finance Act, 2009 with effect from 01-04-1998 and the amendment may have some bearing on the decision of the issues framed in this appeal. In view of the retrospective amendment to Section 115JA, the Tribunal has to reconsider the matter afresh. 4. Learned counsel for the respondent/assessee does not dispute the statement made by the learned counsel for the Revenue and he also agreed for remanding the matter to the Tribunal for decision on the issue referred to above, in the light of retrospective amendment to Section 115JA. 5. In the circumstances, we pass the following: ORDER The order dated 11-05-2007 made in ITA No.457/2006 and order dated 13-08-2007 made in M.P. No.80/2007 for the assessment year 2002-03 are set 5 aside and the matter is remanded to the Tribunal. The Tribunal shall consider the matter afresh and pass order on merits in accordance with law, as expeditiously as possible and preferably within a period of six months from the date of receipt of a copy of this order. All contentions of the parties are kept open. Accordingly, the appeal is disposed of. Sd/- JUDGE Sd/- JUDGE mpk/-* "