Karnataka High Court
M/S Poonja Arcade K.S. Road Mangalore vs The Asst. Commissioner Of Income-Tax on 27 January, 2010
Equivalent citations: 2010 (4) AIR KAR R 974
Bench: D.V.Shylendra Kumar, N.Ananda
IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27TH DAY OF JANUARY, 2o10I =._V PRESENT _W S"Eu'u THE HON'BLE MR.JUS'I'ICE D V I' AND I .. ff: .. V' THE HON'BLE MR.JUST1c:E"I\I' A4'IANDA-- ff: '- Income Tax Apnea! No.3.7Z9 - . Between: M/S. POONJA ARCADE K.S.ROAD, MANGALORE . REP. BY IIS MANAGING DIRECTOR 5 SRI PRABHAKAR NPOONJA * ' AGED ABOUT 56 YEARS . I S/O. SR} NASRU LINOLIVROONS-A"'»--.."A " I APPEI.LAN'I' [BY SRI P. DINESH. A.DvOCA'I'E 'EORSR1..PAR'D~IASARA'rHI. ADVOCATE! " And: THE ASSISTAN'i' _COIIkII*»IISSIOI\I'ER"'O--I«f IN-COME+I'Ax CIRCLE2III ' . MANGALORE. _ _ ' RESPONDEWI' ISRI ARAVIND. Jr. S&'AI\IDIIIG CODNSEIJ FOR SRI A/I.v.SESII.ACHAIA. S'_rANDING_s.COUNSEI.1 'A . _____ M . V' I THIé FILED UNDER SECTION 2S0--A OF I.T.ACT. I9-SI, ARISING«v.,_OU'1*OE ORDER DATEID 30.05.2008. PASSED IN ITA No.S50/ENG/2005. FOR THE ASSESSMENT YEAR I985-86. PRAYING TO ALLOWVITHE AEP.EAL AND SET ASIDE THE ORDER PASSED SY "'I'PfE I'rAT,'---..BAA;GAI,ORE IN ITA N0.85O/BNG/200.3 DATED 30.05.2008. -I__II\I THE INTEREST OF' JUSTICE AND EQUITY. 4. °fI*I~IIS4_.A.I°REAL COMING ON FOR ADMISSION, THIS DAY, D V KDMAR.J.. DELIVERED THE FOLLOWING: JUDGMENT
Appeal under section 260--A of the Income 1961 [for short. 'the Act') relating to the 198586.
2. The assessee is a partnershipl'--.fir1r1. directed against the order 30.05'.-2:_VOGv8 l:[;<?(>py at Armexure--A], passed by Tribunal (for short, 'the tribunal} in NolVv8'§Q,/Bang/2005 is llowirigffiuestions of law, sought to be exa_n':m_e'd oh t.he«'fo said to be arising gm eo'ar:s.e'efi'th'e: 'impugned order and on the preir1ise--th'at."th'e _q"'ues'tion's have been erroneously decided by the "tribané:I_:?K " .
1. Whethter thee-..tribu,r1al was _justi'fied in holding the '-,oroatsiorrs of seeiion 254(2) of the Act were not ' 2 .applicable"to apply the ratio ofthe_jurisdictior1al High »..,_'rer1d.efFed in a judgment' subsequent to the 2 de'liveI'g}'L'of'tthe order of the tribunal?
--V 2. Whether the ratio laid by the jurisdictional High Court. "in the judgment was not law in existence it fo.reoer within thejurisdteiion of the H igh Court to be , " applied by the authorities subordinate as held by the fHon'ble Supreme Court in the case of ACIT us. Saarashtra Kuteh Stock Exchange Ltd. [2008] 305 ITR 227 (SC)?
5. In our order dated 25.01.2010. we have condoned the delay in preferring the appeal in the abserice ()§::l;*.';'vf;.?:l'"'<iV(.)-'Ll"1,w' the appeal has come up for admlSSlOI?:.""' - opposition to the application by the respondent-.rever1tI1'eand V"
6. We have heard Sri Dinesh; .l_earnl€L-d Counsel'appearing for the appellant at great length appeal can be admitted on any by the learned counsel for the assessee not only arisen in the also been erroneously for correction at our hands.
7. We Vh_avelll"also Aravind, leamerl junior s_tjIaIi~dAii'1g=l:_jllltrotlrisel responderlt--re\/enue as the respoln'€,iVe_n'r.A on notice at the tirrie o1l'applieation was considered as aforestated. Sri junior standing Counsel on merits of the submit: there is nothing that required to be in this appeal for admitting the appeal: the order Bhavan". located in Mangalore. to develop and seli thesaid property. This activity constituted business activity.
10. The firm in terms of its 29.11.1981 had purchased propertyj or3_.,.,21l Consideration of Rs.3O lakhs. S1.I'bs__equen_t.1'y. it that the firm was reconstituted on 02.02% to.ad.n9iit one more partner in the name of V international Private Limited. It is.vincidental:t0V 'state tsihareholcfers of this company the of M2/Hs.2Poonja Arcade.
11. It appears' was reconstituted on 02.02. 28.02.1985 and in the process of:dvisso21aLiti_on.w.the'~.asisei:s of the firm namely Ranga Bhavan 5a1l.ott.ed to tihevshare of ineurnbent partner M/ Iriote'is--..Poonjia...:1n,terii1at~iona1 Private Limited and erstwhile six '--..sha_red!A}'Rs.30 lakhs amount. which had been pin. M/s.Hote1 Poonja Inter:nat.iona1 Private "._.Liriiit.eriV.' 'i-rrtheir respective profit shai'ir1g ratios in the profit. of in terms of partnership deed of the firm. t 12 contained in the order itself. 'I'herefore. tlie order passed by the assessing authority was well within the scope of seet'io1'1 153 of the Act.
22. It is aggrieved by the order of the tribunal. appeal under section 260--A of the Act by the 2
23. Submission of Sri Dinesh. learned . eou-Iiselv_for'"the. appellant is that the impugnedprorderfofthe tr1b1;f1a1'* from many errors of law; that 'thieftribLinal""f'a:ile.d: to take notice of the fact that the assessee, gnely the was not a person, before the tribunal. while the tribunal passed a in the five appeals filed by the individualpartileifs of erstwhile partnership firm; the firm b€,,"_«'[_§:'1:gf not a to the order dated 12.06.1998, Copy "produ.e_ed _An_nexure--B, it was ineumbem: upon the trifbunalftogigiyevffanmopportunity of hearing to the firm before 2V'-,..vpassing"fa peoijtuiion order and it had not been done. S'ubmission,1'sfthat. such an order is passed to reassess the assessment of the firm and that the order of the /4 'E 16 {vi Explanation 2:
XXX XJCX xxx xxx, Explanation 3: Where. by an order [re__/"erred.__li'o»firi" l clause {ii} ofsubmseciion {3}}, any mcome v ' from the total income of one person ;'1'i'ifi: hleldio the income of another persor'a_..iher'1;"an asslres§<;jrr:ent' of such income on such oihelrpierisori s"hal'i_e purpose Qfseciion 150* and fliisreseciiorii. beddeeirriled to be one made in conslecglluo-erl1c_eVl'lo'j}'or' ejjeclr to any finding or directiori~co.n:air*ied_indie". order, provided suchl}jo.loih.er& ;;_ae%s§n.f given an opportunity said order was
28. Submission of learned counsel for the assessee is.'_r,hati li>'os'ed..on "these -statutory provisions. in the fifrfst"'vins'taf1c5es;. the tribiihal has commimed an error in procleeecliigfzgrtol"rgiakeobservatiions, which could possibly give to an-.._ord_e1* enable the assessing authority to an ""oirder"'ir1 Tterms"of section 150(1) and secondly, the assessing "._.é1ult11_oriV€y--also has committed an error in issuing notice;
iiinfcirizing the provisions of section I48 of the Act when § 20 question No.3 has to be necessarily answered against the assessee and in favour of the revenue.
30. We have also examined questions 4 & 5 raised in the memorandum of appeal and in the wake of our etnsa}je.rsv.. above. particularly holding that the tribunal was _eori'lelc:rtV.v_"i H in affirming the View taken by the""Corn.mi.ssioner"on ascertainment of profit. and income of the firm. base'd on 'V valuation method adopted by tlieyhConimiss'io_t.ier;; hese questions also are to be arts'-wyeredn againsli'-tyhe asvsesnsee and in favour of the revenue. in'7 theaffil1--"m'at'il_veI» particularly question Nofiél as fratvrzue-dldoesynoti arise in its form. as this is not a questioh.__'lof_ anyl'..a'dd_itcion to the income already d§1.termin.eé;l, but only_re;determination of income in the ha'I:'ds_of .the.v_vi'irmV for the year in question. Question No.5 is conseqiteiitcly answered against the assessee and in favour of revenue. in the affirmative.
.1-31.,f..Sri*-._Dinesh, learned counsel for the assessee. in of the submission that the tribt.mal has committed 24 should have been necessarily followed up for re~0pen-ing the assessment of the partners to bring it t.o tax. "re:5-fiecitive the profit of the firm. in terms of the"p"3rt'ner'«shi;p aspect of the matter and to if any assessment order has terms of the impugned order, it.'-svhoul-Ci' 'strength of the direction issued assessee being given an case before revising the respective {as " "i sav-
" .....
Sd/-
JUDGE income in the hands of the partners. who had.__'appori:io11.ed--V'
36. We direct the assessing' 'a,nti1o'ri.t3} to this?'