THE COMMISSIONER OF INCOME TAX V. M/S M/N.DASTUR & CO.PVT LTD

ITA/811/2007

AI Insights

This Income Tax Appeal was filed by the Commissioner of Income Tax and the Deputy Commissioner of Income Tax against M/s M/N Dastur & Co Pvt Ltd, challenging the order of the Income Tax Appellate Tribunal, Bangalore. The dispute centered on whether a sum of Rs.1 Crore received by the assessee on termination of a contract, along with the return of an advance amount of Rs.5 Crores for the purchase of immovable property, should be treated as capital gains or interest income. The Tribunal had partially allowed the appeal, and the appellants sought to set aside this order and confirm the original order passed by the Deputy Commissioner of Income Tax.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 736310 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 10-03-2014
• Assessment Year: misc
• Other Referred Cases: ITA No.149/2004
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S R ANURADHA
• Assessee Lawyers: E I SANMATHI
• Keywords: Capital Gains; Income tax appeal; Interest income; Miscellaneous petition
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 10th DAY OF MARCH 2014 PRESENT THE HON’BLE MR. JUSTICE DILIP B BHOSALE AND THE HON’BLE MR. JUSTICE B MANOHAR ITA.NO.811/2007 BETWEEN 1. THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C.R.BUILDING QUEENS ROAD, BANGALORE 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(1), C R BUILDING QUEENS ROAD, BANGALORE ... APPELLANTS (BY SRI E I SANMATHI, ADV., FOR SRI K V ARAVIND, ADV.,) AND M/S M/N DASTUR & CO PVT LTD VII FLOOR, RAHEJA TOWERS 26/27, M.G.ROAD BANGALORE ... RESPONDENT (BY SMT S R ANURADHA, ADV.,) THIS ITA FILED U/S.260-A OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 21-06-2007 PASSED IN MP NO.152/BANG/2006 AND ITANO. 731/BANG/2003 FOR THE ASSESSMENT YEAR 1999-2000, PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY ITAT BANGALORE, IN MP NO.152/BANG/2006 AND ITANO.731/BANG/2003 DATED 21-06-2007 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER & CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 12(1), BANGALORE, IN THE INTEREST OF JUSTICE AND 2 EQUITY. THIS ITA COMING ON FOR HEARING, THIS DAY, Dilip B. Bhosale J., DELIVERED THE FOLLOWING: PC: This Income Tax Appeal is directed against the order dated 21.06.2007 passed by the Income Tax Appellate Tribunal (for short ‘Tribunal’), Bangalore Bench ‘A’ in M.P.No.152/Bang/2006 & ITA No.731/Bang/2003 for the Assessment year 1999-2000 whereby the Tribunal allowed the Miscellaneous Petition and consequently the income tax appeal in part to the extent indicated in the order. 2. Learned counsel appearing for the respondent, at the outset, invited our attention to the order dated 07.02.2008 passed by the Division Bench of this Court in ITA No.149/2004 and submitted that the substantial question of law raised in the present appeal is squarely covered by the said judgment. The substantial question of law as formulated by the Division Bench while Admitting the appeal reads thus: 3 “Whether the Tribunal was right in holding that a sum of Rs.1 Crore received by the assessee on termination of the alleged contract and return of advance amount of Rs.5 Crores for purchase of immovable property could be treated as a transfer/relinquishment of right and brought to tax under the head capital gains and not as interest income under the head income from other sources as held by the Assessing Officer in confirmation with the Appellate Commissioner?” 3. Having confronted with the submission of learned counsel appearing for the respondent-assessee, Mr.E.I.Sanmathi, Advocate, holding for Mr.K.V.Aravind, Advocate, appearing for the revenue consented for disposing of this appeal in terms of the order dated 07.02.2008 in ITA No.149/2004. The concluding paragraph of the said order reads thus: “In somewhat similar circumstances, the Bombay High Court has held that such payment made to the assessee has to be treated as a capital gain. Para 12 of the said judgment of the Bombay High Court clearly clinches the issue, which has been reproduced herein above in this appeal. No contra view of any other High Court was brought to our notice. We are also in complete agreement with the reasoning of Bombay High Court mentioned above. In view of this, we are of the 4 considered opinion that the question as projected has to be answered against the Revenue and in favour of the assessee. We accordingly do so. Thus, the appeal stands dismissed.” 4. In the circumstances, this appeal is also dismissed in terms of the order dated 07.02.2008 passed in ITA No.149/2004. No costs. Sd/- JUDGE Sd/- JUDGE TL "