THE COMMISSIONER OF INCOME TAX V. M/S UNITED BREWERIES LTD

ITA/356/2007

AI Insights

This case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s. United Breweries Ltd. concerning the assessment year 2000-01. The appeal was filed under Section 260-A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal, Bangalore, which had confirmed the decision of the First Appellate Authority. The main issues pertained to the deductibility of expenses related to aircraft maintenance and the claim of bad debts. The court's decision addressed the need for a consistent approach in similar cases and deferred a final decision on the bad debts issue pending the Supreme Court's ruling.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 701115 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 28-01-2014
• Assessment Year: misc
• Other Referred Cases: ITA No.338/2007, ITA No.492/2001, ITA No.89/2003, Civil Appeal.No.8275/2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S R ANURADHA
• Assessee Lawyers: K V ARAVIND
• Keywords: Allowable deduction; Bad debts; Depreciation; Income Tax; Maintenance of Aircraft
• Section: 37; 36; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 28TH DAY OF JANUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA NO.356/2007 BETWEEN: 1. The Commissioner of Income Tax, Central Circle, C.R.Building, Queens Road, Bangalore. 2. The Assistant Commissioner of Income Tax, Central Circle -2 (3), C.R.Building, Queens Road, Bangalore. …Appellants (By Sri.K.V.Aravind, Advocate) AND: M/s.United Breweries Ltd., No.1/1, Vittal Mallya Road, Bangalore – 560 001. ….Respondent (By Smt.S.R.Anuradha, Advocate) 2 This ITA is filed u/S.260-A of I.T Act, 1961 arising out of Order dated 15-09-2006 passed in ITA No.3043/Bang/2004 for the Assessment Year 2000-01, 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.3043/Bang/2004 dated 15-09-2006 confirming the order of the Appellate Commissioner and confirm the order passed by the Asst. Commissioner of Income Tax, Central Circle-2(3), Bangalore, in the interest of justice and equity. This appeal coming on for hearing this day, DILIP B. BHOSALE J., delivered the following: P.C. This income tax appeal is directed against the order dated 15th September 2006 rendered by the Income Tax Appellate Tribunal, Bangalore Bench ‘A’ (for short ‘the Tribunal’) in ITA No.3043/Bang/2004 whereby the Tribunal confirmed the order of the 3 Commissioner of Income Tax (Appeals)-VI, Bangalore (for short ‘the First Appellate Authority’) dated 23-07-2004 for the assessment year 2000-01. The respondent-assessee had filed an appeal before the First Appellate Authority against the order of assessment dated 24-03-2003. 2. In this appeal, the revenue has raised the following substantial questions of law: (i). Whether the Tribunal was correct in holding that a sum of Rs.5.57 crores spent on maintenance of aircraft overhauling and refurbishing the aircraft and depreciation of Rs.12,75,507/- is an allowable deduction as held in the earlier assessment year despite the assessee failing to show that this expenditure has been incurred in the course of its business as held by the Assessing Officer. (ii). Whether the Tribunal was correct in holding that the claim of bad debts made by the assessee is an allowable deduction as in the earlier assessment year without examining the facts arising for the current assessment year and recording the finding as to whether such a claim is allowable under section 36 or 4 37 of the Act by satisfying the conditions stipulated there in. 3. Insofar as the first substantial question of law is concerned, there does not appear to be any dispute that a similar question of law was framed in ITA No.338/2007 for the assessment year 1998-99. The said income tax appeal, we are informed, has been disposed of by this court vide judgment and order dated 19-11-2013 and the matter has been remanded to the Assessing Authority for fresh disposal along with the connected matters to avoid conflicting decisions. We are further informed that so far, the Assessing Authority has not disposed of the matters in view of the order dated 19th November 2013 passed in ITA No.338/2007. In the circumstances, we allow this appeal insofar as the first substantial question of law is concerned. The order of the Tribunal, the First Appellate Authority and the Assessing Officer are set aside and the matter is remanded to the Assessing Authority for fresh disposal 5 along with other connected matters including the matter pertaining assessment year 1998-99. All contentions of the parties are kept open. 4. Insofar as the second substantial question of law is concerned, we are informed that this court in ITA No.492/2001 c/w ITA No.89/2003 has considered the very same question and answered it in favour of the revenue and against the assessee. Learned counsel for the assessee informed us that the assessee in those cases has carried the matter to the Hon’ble Supreme Court where the leave has been granted and the SLP has been converted into Civil Appeal.No.8275/2013. 5. In this view of the matter, we answer the second substantial question of law in favour of the revenue subject to the order that will be passed by the Supreme Court in Civil Appeal No.8275/2013 (converted from Special Leave to Appeal (Civil) No.13780/2010). The 6 Assessing Officer is further directed not to take any further steps till disposal of the Civil Appeal No.8275/2013 insofar as the second substantial question of law is concerned. 6. The assessee is directed to communicate the decision of the Supreme Court in Civil Appeal No.8275/2013 to the Assessing Officer within a period of 12 weeks from the date of its disposal. 7. With these observations, the appeal is disposed of. No costs. Sd/- JUDGE Sd/- JUDGE mpk/-* "