By Sri. M v. Seshachala, Sr. Adv. For Sri. Aravind V Chavan.,Adv

Digitally signed byMALA K NLocation: HIGH COURTOF KARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5 DAY OF DECEMBER, 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. 225 OF 2023 BETWEEN: 1. THE PR.COMMISSIONER OF INCOME TAX CENTRAL, 3 FLOOR, C R BUILDING QUEENS ROAD, BENGALURU-560 001 CENTRAL, 3 FLOOR, C R BUILDING QUEENS ROAD, BENGALURU-560 001 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(2), 3 FLOOR, C R BUILDING QUEENS ROAD, BENGALURU-560 001 …APPELLANTS (BY SRI.DILIP M., JR. STANDING COUNSEL) AND: M/S CENTURY REAL ESTATE HOLDINGS PVT LTD NO.10/1, GROUND FLOOR LAKSHMINARAYANA COMPLEX PALACE ROAD, VASANTH NAGAR BENGALURU-560 052, PAN-AADCC 0651M …RESPONDENT (BY SRI. M. V. SESHACHALA, SR. ADV. FOR SRI. ARAVIND V CHAVAN.,ADV.) THIS APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE.II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 580/BANG/2022 DATED 30.11.2022 FOR ASSESSMENT YEAR 2013-2014 ANNEXURE- C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), BENGALURU. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Revenue is directed against judgment and order dated 30.11.2022 in ITA No.580/Bang/2022 passed by the ITAT[1], Bengaluru. 2. Heard Shri M. Dilip, learned Standing Counsel for the Revenue and Shri Sheshachala, learned Senior Advocate for the assessee. 3. Briefly stated the facts of the case are, the petitioner filed its return for assessment year 2013-14. The assessing authority made an addition of Rs.4,23,55,400/- holding that the assessee had received a sum of Rs.8,59,55,400/- as project management fees from M/s Scania Commercial Vehicles Pvt. Ltd. (‘Scania’ for short), but declared only Rs.4,36,00,000/- in its return of income. The Commissioner (Appeals) has confirmed the order passed by the Assessing Officer. On further appeal, 1 Income Tax Appellate Tribunal the ITAT by the impugned order has allowed the appeal. Feeling aggrieved, the Revenue is before this Court. 4. Shri Dilip submitted that it is not in dispute that for assessment year 2013-14, assessee has received Rs.8.59 Crores, but declared only Rs.4.36 Crores. Therefore, there is no error in the order passed by the Assessing Officer in bringing to tax the remaining sum of Rs.4.23 Crores. 5. In reply, Shri Sheshachala submitted that the assessee’s case falls under Accounting Standard-9 (AS-9) on completed contract basis. The ITAT has rightly appreciated the said Accounting Standard and allowed the appeal. He submitted that the Revenue had never disputed the aspect that the assessee has declared the receipt of Rs.8.59 Crores in assessment year 2012-13, 2014-15 and 2015-16. Placing reliance on the decision of this Court in Pr. Commissioner of Income Tax Vs. Fortuna Projects[2], he submitted that in similar circumstances, this Court has held the question of law in favour of the assessee. 6. We have carefully considered the rival contentions and also perused the records. 7. Though this appeal has been admitted to consider 4 questions, learned Advocates on both sides submitted that only the following 3 questions arise for consideration: Commissioner of Income Tax Vs. Fortuna Projects[2], he submitted that in similar circumstances, this Court has held the question of law in favour of the assessee. 6. We have carefully considered the rival contentions and also perused the records. 7. Though this appeal has been admitted to consider 4 questions, learned Advocates on both sides submitted that only the following 3 questions arise for consideration: 1. "Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in holding hat the project management fee was required to be recognized over a period of 5 years and that the same had not accrued to the assesse during the year under consideration without appreciating that the payments to the assesse were on the basis of land acquired and in case no land was acquired in a year, no payments were to be made"?of the case, the Tribunal's order can be said as perverse in holding hat the project management fee was required to be recognized over a period of 5 years and that the same had not accrued to the assesse during the year under consideration without appreciating that the payments to the assesse were on the basis of land acquired and in case no land was acquired in a year, no payments were to be made"? 2. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in holding that assesse had offered the income in question in the later years without appreciating that the assesse is not free to offer the income in any year of its choice and that of the case, the Tribunal's order can be said as perverse in holding that assesse had offered the income in question in the later years without appreciating that the assesse is not free to offer the income in any year of its choice and that 2 ITA No.191/2018 connected with ITA No.192/2018, decided on 11.10.2022 11.10.2022 income has to be brought to tax in the years to which year it relates"? 3. 'Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the services were provided by the assesse in equal proportion in each of the year covered by the agreement and thus failing to appreciate that assesse has to offer income as per accounting standards and the enabling the acquiring of land was the major service and services to be rendered in respect of parcel of land was not existent"? of the case, the Tribunal is right in law in holding that the services were provided by the assesse in equal proportion in each of the year covered by the agreement and thus failing to appreciate that assesse has to offer income as per accounting standards and the enabling the acquiring of land was the major service and services to be rendered in respect of parcel of land was not existent"? 8. Undisputed facts of the case are, assessee has declared receipt of Rs.8.59 Crores in assessment year 2012-13, 2014-15 and 2015-16. The assessment year under consideration in this appeal is 2013-14. 9. It was urged by Shri Dilip that before Commissioner (Appeals), the assessee has taken a stand that AS-7 was applicable and before ITAT, it has taken a stand that AS-9 is applicable. We may record that in view of the undisputed fact that the assessee has declared the receipt of Rs.8.59 Crores for the preceding and subsequent years of the assessment year in consideration, the issue is Revenue neutral. Therefore, for the reasons recorded in Fortuna of Project’s case (supra) which is similar to the case on hand, this appeal must fail. Hence, the following: ORDER i) Appeal is dismissed; ii) Questions of law are answered in favour of the assessee and against the Revenue. of the assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE PA CT:HS List No.: 1 Sl No.: 57