Ita/134/2014 Of Shri Srinivasan Chandira Kumar v. The Additional Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BANGALORE. DATED THIS THE 4[th]DAY OF APRIL 2014 PRESENT THE HON‘'BLE MR. JUSTICE DILIP B BHOSALE AND| THE HON‘'BLE MR. JUSTICE B MANOHAR ITA.NO.134/2014 BETWEEN SHRI SRINIVASAN CHANDIRA KUMAR|596,10TH CROSS,/TH BLOCK|JAYANAGAR,BENGALURU-560 082|S/O SHRI D SRINIVASAN AGED 64 YEARS|... APPELLAN I | (BY SRI BS N PRASAD, ADV.,) ANDTHE ADDITIONAL COMMISSIONER OF INCOME TAXRANGE-4UNITY BUILDING ANNEXE, MISSION ROADBENGALURU-560 O2/7.. RESPONDENT | (BY SRI K V ARAVIND, ADV.,)| THIS ITA FILED UNDER SEC.260-A OF INCOME TAX ACT 1961,ARISING OUT OF ORDER DATED 20/09/2013 PASSED IN ITA NO..1061/BANG/2012, FOR THE ASSESSMENT YEAR 2009-10 PRAYING TO:1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED)ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED|BY THE ITAT, IN ITA NO.1061/BANG/2012, DATED: 20/09/2013 TOTHE EXTENT IT IS PREJUDICIAL TO THE APPELLANT.THIS ITA COMING ON FOR’ ADMISSION, THIS’ DAY,Dilip B. Bhosale J.,DELIVERED THE FOLLOWING PC: We nave heard learned counsel for the parties. By |consent, the appeal is heard for final disposal at the stageof admissIon.| 2).This appeal is directed against the order dated20.09.2013 passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘A’, whereby ITA No.1061/Bang/2012,|pertaining to Assessment Year 2009-10, has been disposed|of confirming the orders passed by the First AppellateAutnority and tne Assessing Officer. The substantial|questions of law formulated by the appellant, in thepresent appeal, read thus: is 1Whether, on the facts and in the)circumstances of the case, the Tribunal was.justified in disallowing the appellant's claim fordeduction of an amount of Rs.20,97,600/- byincorrectly applying the provision of Section 37.of the Income Tax Act, 1961? Whether, on the facts and in the}circumstances of the case, the TridDunal wasjustified in disallowing the appellant’s claim fordeduction under Section 48(i) of the Act when.the requirement of law that the expendituremust be incurred wholly and exclusively in.connection with tne transfer of a long term.capitalasset|nas|peen|metand.the. expenditure claimed is intrinsically linked with.and therefore incidental to the transfer of snares?| ‘3.Mr.B.S.N. Prasad, learned counsel for theappellant, at the outset, submitted that the Tribunal wnile|considering the appeal on merits proceeded on tne wrong,assumption that the appellant had claimed deduction of|<20,97,600/- as business expenditure under Section 37 of|the Income Tax Act, 1961 (for short *Act‘) when it was thecase of the appellant that ne was entitled for deduction.under Section 48(1) of the Act. In support, he invited ourattention to paragrapn-9 of the order, whicn reads tnus: “ASregards.thedisallowance Of|Rs.20,97,600/- is concerned, the brief facts oftne case are that, wnen the company in whichthe assessee is a Ssnarenolder was sold to M/sEMR Ltd., there was a stipulation in the sale.deed that the promoters shall credit certainamount to a trust for the welfare of the ex-employees. The assessee had claimed that asum of Rs.20,97,000/- nas been deposited intothe bank account towards contribution for the|Crustand,therefore,It.ISaDusInNeSsexpenditure u/s 37 of the Income-tax Act andnas to be allowed as such. However, theAssessing Officer observed that no trust hasbeen set up by the seller put only nasdeposited the amount into a separate bankaccount. He held tnat as tne conaition of tne| agreement is not fulfilled, the purpose andutilizationof|tnecontribution|remained.doubtful and hence, cannot be allowed as an_expenditure in the hands of the assessee. He.accordingly brougnt it to tax.”| 4He also invited our attention to the grounds ofappeal and the written submissions filed before theTribunal in support of nis contention. He, therefore,|prayed for setting aside the order passed by the Tribunaland for remand of tne case for its fresn consideration. agreement is not fulfilled, the purpose andutilizationof|tnecontribution|remained.doubtful and hence, cannot be allowed as an_expenditure in the hands of the assessee. He.accordingly brougnt it to tax.”| 4He also invited our attention to the grounds ofappeal and the written submissions filed before theTribunal in support of nis contention. He, therefore,|prayed for setting aside the order passed by the Tribunaland for remand of tne case for its fresn consideration. 5.Mr.K.V.Aravind, learned counsel appearing forthe respondent, on the other hand, submitted that if the)appellant-assessee is ready to give up his claim of.deduction under Section 37, the matter may be remanded|to the Tribunal to consider his claim of deduction under|Section 48 of the Act. 6.|Having considered the submissions of learnedcounsel for the parties, we are satisfied that this appealcan be conveniently disposed of by the following order: ORDER. /.The order dated 20.09.2013 is set aside andthe ITA No.1061/Bang/2012 Its restored tofile. The Tribunal shall consider the appealafresh on merits in accordance with law.the ITA No.1061/Bang/2012 Its restored tofile. The Tribunal shall consider the appealafresh on merits in accordance with law. Il.It 1s made clear that it would not be open to the appellant-assessee to claim deductionunder Section 37 of the Act before theTribunal. In otner words, the Tribunal snaliunder Section 37 of the Act before theTribunal. In otner words, the Tribunal snali examine the appeal afresh in the light of theclaim of tne appellant that he ts entitied fordeduction under the provisions of Section 48of the Act,claim of tne appellant that he ts entitied fordeduction under the provisions of Section 48of the Act, J.In the circumstances,the appeal Is disposed of.It is made clear tnat we nave not addressed thne|substantial questions of law raised in the instant appeal. No costs. TL| Sd/-. JUDGE| Sd/- JUDGE|