Karnataka High Court
The Pr Commissioner Of Income Tax vs M/S Bangalore Housing Development And ... on 29 May, 2023
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
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ITA No. 325/2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF MAY, 2023
PRESENT
THE HON'BLE MR JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
INCOME TAX APPEAL NO. 325 OF 2019
BETWEEN:
1. THE PR. COMMISSIONER OF INCOME-TAX
CIT(A), 5TH FLOOR, BMTC BUILDING
80 FEET ROAD, KORMANGALA
BENGALURU-560 095.
Digitally signed 2. THE DEPUTY COMMISSIONER OF INCOME-TAX
by ANUSHA V CIRCLE-1(2)(1), 2ND FLOOR, BMTC BUILDING
80 FEET ROAD, KORMANGALA
Location: HIGH BENGALURU-560 095. ...APPELLANTS
COURT OF
KARNATAKA (BY SHRI. M. DILIP, STANDING COUNSEL FOR
SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL)
AND:
M/s. BANGALORE HOUSING
DEVELOPMENT AND INVESTMENTS
NO.10/1, LAKSHMINARAYANA COMPLEX
PALACE ROAD
BENGALURU-560 052.
PAN-AAGFB 0819A ...RESPONDENT
(BY SHRI. ARVIND KAMATH, SENIOR ADVOCATE FOR
SHRI. POPAT PRASHANT DHARMASINH, ADVOCATE)
THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME
TAX ACT 1961, ARISING OUT OF THE ORDER DATED 07.11.2018
PASSED IN ITA NO.556/BANG/2018 FOR THE ASSESSMENT YEAR
2013-2014, PRAYING TO FORMULATE THE SUBSTANTIAL
QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND
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ITA No. 325/2019
SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE
TRIBUNAL, BENGALURU IN ITA NO.556/Bang/2018 DATED
07.11.2018 FOR ASSESSMENT YEAR 2013-14 ANNEXURE-C
CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND
CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF
INCOME TAX, CIRCLE-1(2)(1) AND ETC.,
THIS APPEAL IS COMING ON FOR HEARING, THIS DAY,
P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the Revenue challenging the order dated November 7, 2018 in ITA No.556/Bang/2018 passed by the ITAT1, Bengaluru, for A.Y.2013-14 has been admitted to consider following questions of law:
"1. Whether on the facts and in the circumstances of the case, the Tribunal is right in allowing expenses claimed by the assessee can be held as "Business expenses" and same can be allowed to be set off against income from Commission/Income from other sources when there is no nexus between the expenses and the income and same is not allowable under the provisions of section 37(1) of the Act?
2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in allowing the expenses claimed as business expenses, when the assessee had ceased to have active business 1 Income Tax Appellate Tribunal -3- ITA No. 325/2019 activities in the earlier years and did not show any revival during the relevant financial year?
3. Whether on the facts and in the circumstances of the case, expenses claimed by the assessee can be held as "Business expenses" when the assessee had no reported business activities during the relevant financial year and income disclosed was from commission earned and income from other sources?"
2. Heard Shri M.Dilip, learned standing counsel for the Revenue and Shri Arvind Kamath, learned Senior Advocate for the assessee.
3. Briefly stated facts of the case are, assessee is a partnership firm engaged in Real Estate Business. For A.Y.2013-14, assessee claimed expenditure of Rs.3,71,23,836/- and it was disallowed. The CIT(A)2 allowed the appeal by following the assessment order for A.Y.2008-09. Revenue challenged the CIT(A)'s order with regard to expenditure of Rs.3,71,23,836/- claimed by the assessee and assessee challenged the CIT(A)'s order on different aspect. The ITAT has disposed of both appeals by the common impugned order.
2Commissioner of Income Tax (Appeals) -4- ITA No. 325/2019
4. Shri Dilip for the Revenue submitted that assessee had earned only a sum of Rs.5,11,008/- for A.Y.2013-14 and showed an expenditure of Rs.3,71,23,836/- which is grossly disproportionate to the earnings of the firm. Only in order to reduce taxable rental income of Rs.6.98 Crores, assessee had claimed expenditure. The CIT(A) erred in following the earlier assessment order for A.Y.2008-09. He argued that each assessment year is different and there will be no precedent so far as computation of expenditure is concerned. The AO3 has rightly considered the expenditure for the relevant year and disallowed the same and that the ITAT has fallen into the same error by dismissing the Revenue's appeal. He submitted that ITAT has simply extracted the order passed by the CIT(A). Therefore, impugned order is unsustainable in law.
5. In reply, Shri Kamath, adverting to paragraphs 10 and 11 of the ITAT's order, submitted that in identical circumstances for A.Y.2008-09, assessee had 3 Assessing Officer -5- ITA No. 325/2019 incurred expenditure and the same was allowed. The ITAT has extracted the order passed by the CIT(A) on Grounds No.5 to 9 and rightly held that on the principle of consistency, the order passed by the CIT(A) did not call for any interference. He pointed out that the ITAT has recorded that learned DR could not point out any difference in facts before the ITAT vis-a-vis A.Y.2008-09. Therefore, no interference is called for in this appeal.
6. We have carefully considered rival contentions and perused records.
7. Undisputed facts of the case are, admittedly, assessee had incurred certain expenditure for A.Y.2008-09 and the same was allowed by the AO and it has remained unchallenged. The ITAT, which is the last fact finding authority, has recorded a fact at para 11 of the impugned order that learned DR could not point out any difference in the facts with regard to the A.Y.2008-09 and A.Y.2013-14. The CIT(A)'s order has been upheld on the ground of principle of consistency. In that view of the matter, -6- ITA No. 325/2019 in our opinion, no substantial question of law arises for consideration. Resultantly, this appeal must fail and it is accordingly dismissed.
No costs.
Sd/-
JUDGE Sd/-
JUDGE AV List No.: 1 Sl No.: 31