Capital Gain Which Are To Be Considered Forthe Purpose Of Computing Tax Liability Undersection 115Jb Of The Act By Following Thedecision Of This Court In The Ca v. Msr An

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 1/[TH|]DAY OF MARCH 27071 PRESENT THE HON’BLE MR.JUSTICE ALOK ARADHE AND| THE HON’BLE MR.JUSTICE H.T.NARENDRA PRASAD ITA NO.460 OF 2017C/W ITA Nos.458 OF 2017, 459 OF 2017 &461 OF 2017 IN ITA 460/2017BEIT WE 1.|PR. COMMISSIONER OF | INCOME TAX-4 BMTC COMPLEX KORAMANGALA BANGALORE. 2 |DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -11(5), BANGALORE. .,APPELLANTS (BY SRI. E.ILSANMATHI, ADV.) AND KARNATAKA STATE INDUSTRIAL INFRASTRUCTURE.DEVELOPMENT CORPORATION LITD.,KHANIJA BHAVAN, 4TH FLOOR|EAST WINGNO.49, RACE COURSE ROADBENGALURU-560001PAN - AAACK 5531H. RESPONDENT| (BY SRI. A. SHANKAR, SENIOR COUNSEL FOR.SRI. M.LAVA, ADV.) THIS ITA IS. FILED UNDER SECTION 260-A.INCOME TAX ACT 1961, PRAYING TO 1) DECIDE THEFOREGOING QUESTION OF LAW AND OR SUCH OTHERQUESTIONS OF LAW AS MAY BE FORMULATED BYTHAT HON’BLE COURT AS DEEMED FIT AND SETASIDE THE APPELLATE ORDER DATED:09.127.7016PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,‘B’ BENCH BENGALURU AS SOUGHT FOR IN THERESPONDENT-ASSESSEE’S CASE, INAPPEALPROCEEDINGS IN ITA NO.1861/BANG/2013 FOR A.Y.2008-2009 & GRANT SUCH OTHER RELIEF ASDEEMED FIT, IN THE INTEREST OF JUSTICE. IN ITA 458/2017BETWEEN 1.|PR. COMMISSIONER OF | INCOME TAX-4 BMTC COMPLEX KORAMANGALA BANGALORE. 2 |DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE -11(5).BANGALORE. (BY SRI. E.ILSANMATHI, ADV.) ANI _ APPELLANTS KARNATAKA STATE INDUSTRIALINFRASTRUCTURE.DEVELOPMENT CORPORATION LITD.,KHANIJA BHAVAN, 4TH FLOOR|FEAST WINGNO.49, RACE COURSE ROAD,BENGALURU-560001PAN - AAACK 5531H. RESPONDENT| (BY SRI. A. SHANKAR, SENIOR COUNSEL FOR.SRI. M.LAVA, ADV.) THIS ITA IS. FILED UNDER SECTION 260-A.INCOME TAX ACT 1961, PRAYING TO 1) DECIDE THEFOREGOING QUESTION OF LAW AND OR SUCH OTHERQUESTIONS OF LAW AS MAY BE FORMULATED BYTHAT HON’BLE COURT AS DEEMED FIT AND SETASIDE THE APPELLATE ORDER DATED:09.127.7016PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,‘B’ BENCH BENGALURU AS SOUGHT FOR IN THERESPONDENT-ASSESSEE’S CASE,INAPPEALPROCEEDINGS IN ITA NO.1659/BANG/2013 FOR AY.2008-2009 & GRANT SUCH OTHER RELIEF ASDEEMED FIT, IN THE INTEREST OF JUSTICE. IN ITA 459/2017BEIT WE 1.|PR. COMMISSIONER OF |INCOME TAX-4,BMTC COMPLEX,INCOME TAX-4,BMTC COMPLEX, KORAMANGALA BANGALORE. 2 |DEPUTY COMMISSIONEROF INCOME TAX,OF INCOME TAX, CIRCLE -11(5). BANGALORE. (BY SRI. E.ILSANMATHI, ADV.) AND _ APPELLANTS KARNATAKA STATE INDUSTRIALINFRASTRUCTURE.DEVELOPMENT CORPORATION LITD.,KHANIA BHAVAN, 4TH FLOOR|EAST WINGNO.49, RACE COURSE ROAD,BENGALURU-560001PAN - AAACK 5531H. RESPONDENT| (BY SRI. A. SHANKAR, SENIOR COUNSEL FOR.SRI. M.LAVA, ADV.) THIS ITA IS. FILED UNDER SECTION 260-A.INCOME TAX ACT 1961, PRAYING TO 1) DECIDE THEFOREGOING QUESTION OF LAW AND OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BYTHAT HON’BLE COURT AS DEEMED FIT AND SETASIDE THE APPELLATE ORDER DATED:09.127.7016PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,‘Bo BENCH BENGALURU AS SOUGHT FOR IN THERESPONDENT-ASSESSEE’S CASE,INAPPEALPROCEEDINGS IN ITA NO.1660/BANG/2013 FOR AY.2010-2011 & GRANT SUCH OTHER RELIEF ASDEEMED FIT, IN THE INTEREST OF JUSTICE. IN ITA 461/2017BETWEEN 1.|PR. COMMISSIONER OF |INCOME TAX-4,BMTC COMPLEX,INCOME TAX-4,BMTC COMPLEX, KORAMANGALA BANGALORE. 2.|DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -11(5). BANGALORE. _ APPELLANTS (BY SRI. E.ILSANMATHI, ADV.) ANI KARNATAKA STATE INDUSTRIALINFRASTRUCTURE.DEVELOPMENT |CORPORATION LTD., KHANIA BHAVAN, 4TH FLOOR| FEAST WINGNO.49, RACE COURSE ROAD,BENGALURU-560001PAN - AAACK 5531H. RESPONDENT| (BY SRI. A. SHANKAR, SENIOR COUNSEL FOR.SRI. M.LAVA, ADV.) IN ITA 461/2017BETWEEN 1.|PR. COMMISSIONER OF |INCOME TAX-4,BMTC COMPLEX,INCOME TAX-4,BMTC COMPLEX, KORAMANGALA BANGALORE. 2.|DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -11(5). BANGALORE. _ APPELLANTS (BY SRI. E.ILSANMATHI, ADV.) ANI KARNATAKA STATE INDUSTRIALINFRASTRUCTURE.DEVELOPMENT |CORPORATION LTD., KHANIA BHAVAN, 4TH FLOOR| FEAST WINGNO.49, RACE COURSE ROAD,BENGALURU-560001PAN - AAACK 5531H. RESPONDENT| (BY SRI. A. SHANKAR, SENIOR COUNSEL FOR.SRI. M.LAVA, ADV.) THIS ITA IS. FILED UNDER SECTION 260-A.INCOME TAX ACT 1961, PRAYING TO 1) DECIDE THEFOREGOING QUESTION OF LAW AND OR SUCH OTHERQUESTIONS OF LAW AS MAY BE FORMULATED BYTHAT HON'’BLE COURT AS DEEMED FIT AND SETASIDE THE APPELLATE ORDER DATED:09.127.7016PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,‘B’ BENCH BENGALURU AS SOUGHT FOR IN THERESPONDENT-ASSESSEE'SCASE,|INAPPEALPROCEEDINGS IN ITA NO.1862/BANG/2013 FOR ALY.2010-2011 & GRANT SUCH OTHER RELIEF ASDEEMED FIT, IN THE INTEREST OF JUSTICE. THESE ITA’S COMING ON FOR HEARING, THISDAY,ALOKARADHE|J.,DELIVEREDTHEFOLLOWING: JUDGMENT Mr.E.]l.Sanmatni,iearnec|counsel|fortneRevenue.| Mr.A.Shankar, learned senior counsel for the)aSSeSsSee. 2 |These appeals under Section 260A of theIncome Tax Act, 1961 have been filed by the Revenue.against the order dated 9.12.2016 passed by theIncome Tax Appellate Tribunal pertaining to theAssessment years 2008-09 and 2010-11. 3.In ITA No.458/2017 and ITA No.459/201/7,the following substantial question of law arises forconsideration: | “Whether.Of)thefacts|andIn|thecircumstances of the case, the Tribunal Isright in law in holding that the assessee-Company is_ entitled to the benefit ofindexation while calculating long term capital gain which are to be considered forthe purpose of computing tax liability underSection 115JB of the Act by following thedecision of this Court In the case of THECOMMISSIONER OF [INCOME TAX ANDANR. vs. MSR AND SONS [INVESTMENTSLIMITED passed in ITA WNo.3189/2005dated 14.9.7011 even when the saiddecision has not reached finality and thecomputation made by the assessee in thisaspect was erroneous?” In ITA No.460/2017 and ITA No.461/2017, thefollowing substantial question of law. arises’ foconsideration: “Whether.Of)thefacts|andIn|thecircumstances of the case, the Tribunal Isright"In|law.In|Settingasidethedisallowance under Section 14A read withRule 8D of the Act by following the decisionof this Court in ITA No.423/2014 disposedOf)20.11.7015(COMMISSIONER|OF|INCOME.TAXVS.KARNATAKASTATE. INDUSTRIAL ANDINFRAS [RUC TURDEVELOPMENT CORPORATION LTD.) in thecase of the assessee for the assessmentyear 2009-10 even when the said decisionhas not reached finality?” In ITA No.459/2017, the following substantialquestions of law arise for consideration: (1)Whether on the facts and in thecircumstancesOF|theCaSE,theTribunal ts right in law in. allowingdeduction for payment under Section.37 of the Act towards donation to CMRelief Fund even when the samecannotbe|treateddSbusiness|expenditure and not even coincidentalto the business carried on by theaSSeSSECe? (iI)Whether on the facts and in the'circumstances|OF|theCaSE,theTribunal ts right tn law in holding that|the assessee-Company is entitieq tothebenefitOF|indexationwhile 10 calculating long term capital gainwhich are to be considered for the|purpose of computing tax liabilityunder Section 115JB of the Act byfollowing the decision of this Court in|the case of THE COMMISSIONER OFINCOME TAX AND ANR. vs. MSR AND|SONS INVESTMENTS LIMITED passedin ITA No.3189/2005 dated 14.9.2011 even when the said decision has not|reached finality and the computationmade by the assessee in this aspect:was erroneous? Since the substantial questions of law involved in-these batch of appeals are similar, these appeals are. heard analogously and are being decided by thiscommon judgment. 4The facts giving rise to filing of theseappeals briefly stated are that the assessee is acompany and an undertaking of the Government of 10 calculating long term capital gainwhich are to be considered for the|purpose of computing tax liabilityunder Section 115JB of the Act byfollowing the decision of this Court in|the case of THE COMMISSIONER OFINCOME TAX AND ANR. vs. MSR AND|SONS INVESTMENTS LIMITED passedin ITA No.3189/2005 dated 14.9.2011 even when the said decision has not|reached finality and the computationmade by the assessee in this aspect:was erroneous? Since the substantial questions of law involved in-these batch of appeals are similar, these appeals are. heard analogously and are being decided by thiscommon judgment. 4The facts giving rise to filing of theseappeals briefly stated are that the assessee is acompany and an undertaking of the Government of Karnataka, which is engaged in financing industrialunits in the State of Karnataka. The assessee filed its|return of income for the assessment years 2008-09and2010-11ON)30.9.7008|and22.10.2010respectively. Subsequently, for the assessment year2008-09, the assesseefiled revised)return ons99.10.2010. The returns filed by the assessee wereselected for scrutiny. It is the case of the assessee.that no notice under Section 143(2) of the Act wasissued for the assessment year 2010-11 and an orderof assessment dated 21.12.2010 was passed underSection 143(3) of the Act, by which the assessingauthority has recomputed the disallowances underSection 14A of the Act for a sum of Rs.1,76,00,000/-—and aifference of Rs.1,57,35,410/- was disallowed andadded back to income. The assessing authority alsomade other disallowances. Being aggrieved, theassesse filed appeal before the Commissioner of Income Tax, who, by order dated 1/7.9.2013 hasdeleted.theadditions.made.Dy theassessing authority. The Revenue thereupon filed appeals beforethe Tribunal. The Tribunal by a common order dated9.12.2016 has dismissed the appeals preferred by theRevenue. In the factual background, the revenue hasfiled the instant appeals. 5.|The learned counsel for the revenuesubmitted that the Tribunal ought to have appreciatedthat there is no direct nexus between the businessand contribution which was made by the assessee forthe welfare fund. It Is further submitted that theTridDunal erred in dismissing the appeals preferred bythe Revenue. 6.|The learned senior counsel for the assesseesubmitted that substantial questions of law involved in.ITA No.459/2017 are covered by the decision of the Hon'ble Supreme Court in the case of)Sri VenkataSatyanarayana Rice mill Contractors Co. -v-.Commissioner of Income-tax [(1996) 89 Taxman.92 (SC)]. It is alSo pointed that substantial question|of law tnvolved in ITA No.460/2017 and ITANo.461/2017 is covered by the decision of this Courtin the case ofCIT -—-v- Karnataka State Industrieand Infrastructure Development Corpn. Ltd.(2016) 65 Taxman.com 296 (Kar.)_ Whereas the.substantial.question|oflawINVOI|VECIn|ITANo.458/2017 and 459/2017 is covered by the decisionof this Court In the case ofBest Trading and.AgenciesLtd.=_—VDCIT(2020)119°Taxmann.com 129 (Kar.)and decision of this Courtin the case ofCIT —-v- MSR and Sons InvestmentsLtd in ITA No.3189 of 2005 (Kar.) J |We have considered the submissions madeon both sides. 8.|The substantial questions of law involved inITA No.459/2017 are covered by the decision of the SupremeCourtIn|theCASCofSFIVenkataSatyanarayana Rice Mill Contractors(supra), thesubstantial.question|oflawINVOI|VECIn|TTA.No.460/2017 and ITA No.461/2017 is covered by thedecision of this Court In the case of.CIT -v-=Karnataka State Industries and Infrastructure|Development Corpn. Ltd.(Supra) and substantial|question of law involved in ITA No.458/2017 and459/2017 is covered by the decision of this Court inthe case of.Best Trading and Agencies Ltd.(Supra)and decision of this Court In the case of|MSR andSons Investments Ltd. (Supra). | 9 |For the reasons assigned therein, thesubstantial questions of law involved in these appealsare answered against the Revenue and in favour ofthe assessee. �����2�458�08=<74!�F8�>629�2;�38064�62�458� 62=4124�1AA817=����58�=138�>167�129�108�5808CD� SupremeCourtIn|theCASCofSFIVenkataSatyanarayana Rice Mill Contractors(supra), thesubstantial.question|oflawINVOI|VECIn|TTA.No.460/2017 and ITA No.461/2017 is covered by thedecision of this Court In the case of.CIT -v-=Karnataka State Industries and Infrastructure|Development Corpn. Ltd.(Supra) and substantial|question of law involved in ITA No.458/2017 and459/2017 is covered by the decision of this Court inthe case of.Best Trading and Agencies Ltd.(Supra)and decision of this Court In the case of|MSR andSons Investments Ltd. (Supra). | 9 |For the reasons assigned therein, thesubstantial questions of law involved in these appealsare answered against the Revenue and in favour ofthe assessee. �����2�458�08=<74!�F8�>629�2;�38064�62�458� 62=4124�1AA817=����58�=138�>167�129�108�5808CD� :&�/&��(:��� �� �������������$:�3��� !�"� $:�3��� !�"��