Tumkur DCC Bank Ltd V. Assistant Commissioner of Income Tax Circle - 1 Tumkur

ITA/350/2019

AI Insights

This case involves an appeal by M/s Tumkur DCC Bank Ltd against the order of the Income Tax Appellate Tribunal, Bangalore, which denied certain deductions claimed by the bank for the assessment years 2009-10 and 2010-11. The main issues were whether the contributions to the education fund of the Government of Karnataka and expenditures on infrastructure assistance were allowable as deductions under the Income Tax Act. The High Court of Karnataka, referencing decisions in similar cases, ruled in favor of the Assessee, allowing the deductions and dismissing the appeal by the Revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 798580 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-02-2023
• Assessment Year: misc
• Other Referred Cases: Principal Commissioner of Income Tax vs. The Karnataka State Co-op. Apex Bank Ltd., Karnataka State Apex Co-op. Bank Ltd. Vs. Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: V CHANDRASEKHAR
• Keywords: Business expenditure; Deduction; Income tax appeal; Education Fund; Incentive and Infrastructure Assistance; Mandatory Payment
• Section: 260-A

Judgement Text

" - 1 - ITA No. 350 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF FEBRUARY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR INCOME TAX APPEAL NO. 350 OF 2019 BETWEEN: M/S TUMKUR DCC BANK LTD REP BY ITS MANAGING DIRECTOR PRAKASH G P B NO.44 TOWN POLICE STATION TUMKUR - 572 102 PAN:AAAAD2860J …APPELLANT (BY SHRI. V. CHANDRASEKHAR, ADVOCATE) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 1 TUMKUR …RESPONDENT (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 31.01.2019 PASSED IN ITA NO. 1532-1533/BANG/2016, FOR THE ASSESSMENT YEAR: 2009-10 AND 2010-11, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED THEREIN AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND ALLOW THE APPEAL, SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE ‘B’ BENCH IN ITA 1532-1533/BANG/2016 DATED: 31.01.2019 FOR THE ASSESSMENT YEAR 2009-10 AND 2010-11 ANNEXURE-A AND ETC. Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA - 2 - ITA No. 350 of 2019 THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Revenue challenging the order dated 31.01.2019 in ITAs No.1532-1533/Bang/2016 passed by the ITAT1, \"B\" Bench, Bangalore, has been admitted to consider following questions of law: “1. Whether the Tribunal was justified in holding that the contribution to the education fund of the Government of Karnataka, was not allowable as an deduction, without appreciating that the said payment was mandatory and unlike other reserves, the said amounts were not available to the appellant and has thereby passed a perverse order, on the facts and circumstances of the case. 2. Whether the Tribunal was justified in holding that the expenditure on incentive and infrastructure assistance was not incurred for the benefit of the appellant, rather for third parties, without appreciating that the expenditure was incurred wholly and exclusively for the business, i.e. for creating better infrastructure, the benefit of which would accrue to the appellant, thereby 1 Income tax Appellate Tribunal, Bengaluru Bench - 3 - ITA No. 350 of 2019 passed a perverse order on the facts and circumstances of the case.” 2. Heard Shri V. Chandrasekhar, learned Advocate for the appellant-Assessee and Shri. E.I. Sanmathi, learned Advocate for the respondent-Revenue. 3. At the outset, Chandrashekar submits that first Question of law raised in this appeal is covered by the decision of this Court in Principal Commissioner of Income Tax vs. The Karnataka State Co-op. Apex Bank Ltd.2 and second question in Karnataka State Apex Co-op. Bank Ltd. Vs. Deputy Commissioner of Income Tax3. In both cases, questions of law have been answered in assessee’s favour. He has filed a memo of even date to that effect. 4. The said submission is not disputed by Shri Sanmathi. 5. In view of the above, the following: 2 ITA No.516/2016 DD 05.07.2021 3 ITA No.275/2015 DD 09.03.2021 - 4 - ITA No. 350 of 2019 ORDER (i) Appeal is dismissed; (ii) The substantial questions of law are answered in favour of the Assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE YN List No.: 1 Sl No.: 10 "