Ita/183/2017 Of M/S Karnataka State Industrial And Infrastructure Development Corporation Ltd v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 8 DAY OF JUNE 20271. PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE M.I. ARUN. ILT.A. NO.183 OF 2017 BEITWEEN M/S. KARNATAKA STATE INDUSTRIAL AND.INFRASTRUCTURE DEVELOPMENT.CORPORATION LTD.,REP. BY ITS CHAIRMAN AND.MANAGING DIRECTOR|SMT. P. HEMALATHAKHANIJA BHAVAN, NO.49, 4TH FLOOR|EAST WING, RACE COURSE ROAD.BANGALORE-560001PAN: AAACK 5531H. — APPELLANT| (BY SRI. A. SHANKAR, SR. ADV., FOR|SRI. S. ANNAMALAI, ADV.,) | AND DEPUTY COMMISSIONER OF INCOME TAX.CENTRAL CIRCLE-11(5)R.P. BHAVAN, OPP. RBI|NRUPATHUNGA ROAD|BANGALORE-560001 PRESENTLY BMTC BUILDING KORAMANGALA 6TH BLOCKBANGALORE-560095. (BY SRI. K.V. ARAVIND, ADV.,) .., RESPONDENT THIS IB.T.A. IS FILED UNDER SECTION 260-A OFI.T.ACT, 1961, ARISING OUT OF ORDER DATED 09-12-2016PASSED IN ITA NO.1659/BANG/ 2013, FOR THE ASSESSMENTYEAR 2008-09, PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTION OF LAW ASSTATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THEAPPELLANT. I]. ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TOTHE EXTENT AGAINST THE APPELLANT IN THE ORDER|PASSED|BYTHE|ITAT,.BENGALURUBENCHIN|TTANOS.1659/BANG/2013DATED09-17-2016|FOR|THE|ASSESSMENT YEAR 2008-09 & ETC. THIS I.T.A. COMING ON FOR HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short).has been preferred by the assessee. The subject matter|of the appeal pertains to the Assessment Year 2008-09.The appeal was admitted by a Bench of this Court on05.17.2701 CO consider.thefollowing.substantialquestions of law:| “(1) Whether the Tribunal is Justified inlaw in not holding that the assessment orderitself i¢ bad In law and void ab initio when thenotice under section 143(2) of the Act which Ismandatory for assumption of jurisdiction by theassessing officer was never issued and servedon the assessee in respect of the revised returnon the facts and circumstances of the case?| (il)Whether the Tribunal is Justified inlaw in holding that the appellant its not entitledtO|thereductionoftheamountofRs.16,11,65,105/- credited to the profit andloss account on account of reversal of provisionfor bad and doubtful debts under section 115JBof the Act, on the facts and circumstances of the.Case?| (11) |Without prejudice, whether theTribunal in law failed to take note of the fact ofretrospective amendment by Finance (No.2)Act, 2009 with effect from 01.04.2001, by whichthe computation of book profit as per MATprovisions requires the provision for bad anddoubtfuldebtsto.be|added|back|and|consequently book profits under MAT provisions are to computed for such earlier assessmentyears in accordance with amended scheme ofthe Act and further such amended computationought to form the basis of computation of MATfor the subsequent years and accordingly theauthorities below ought to have allowed thereduction of Rs.16,11,65,105/- under proviso toclause (1) of Explanation 1 to section 115JB(2),on the facts and circumstances of the case?| (iv)Without prejudice, whether theTribunal in law failed to appreciate that theappellant had added back the provision for badand doubtful debts for certain years and henceought to have granted the deduction in respectof reversal of provision for bad and doubtfuldebts at least to that extent, on the facts andcircumstances of the case?| (Vv)Whether the Tribunal Is justified in.law in holding that the indirect expendituredisallowed under section 14A read with rule8D/(ill) of Rs.47,01,514/- in computing the totalincome under normal provisions of the Act, is tobe added to the net profit in computation ofbook profit for MAT purposes under section115JB and thereby importing the provision of section 14A read with rule 8D into the MATprovisions on the facts and circumstances of thecase?” (iv)Without prejudice, whether theTribunal in law failed to appreciate that theappellant had added back the provision for badand doubtful debts for certain years and henceought to have granted the deduction in respectof reversal of provision for bad and doubtfuldebts at least to that extent, on the facts andcircumstances of the case?| (Vv)Whether the Tribunal Is justified in.law in holding that the indirect expendituredisallowed under section 14A read with rule8D/(ill) of Rs.47,01,514/- in computing the totalincome under normal provisions of the Act, is tobe added to the net profit in computation ofbook profit for MAT purposes under section115JB and thereby importing the provision of section 14A read with rule 8D into the MATprovisions on the facts and circumstances of thecase?” 2. Facts leading to filing of this appeal brieflystated are that assessee is a company and is anundertaking of the Government of Karnataka engaged infinancing industrial units in the State of Karnataka. The|assessee filed its return of income for the Assessment|Year 2008-09 on 30.09.2008. Thereafter, the assesseefiled revised return on 09.03.2010. The return was/§selected for scrutiny. However, it is the claim of theassessee that no notice under Section 143(2) of the Acthas been issued for the Assessment Year 2008-09. The.assessment was completed under Section 143(3) of theAct. 3. The assessee thereupon filed an appeal beforethe Commissioner of Income Tax (Appeals), who by an.order dated 17.09.2013, deleted the additions made under normal provisions of the Act and in respect of.additions made in computation under Section 115JB ofthe Act, the Assessing Officer did not grant relief with|respect of disallowance of provision for bad and doubtfuldebts written back, disallowance of estimated expenses.under Section 14A of the Act and indexation benefit of.long term capital gains under Section 10(38) of the Acct,under Section 115JB of the Act. The assessee as well as.the revenue filed an appeal before the Tribunal. TneTribunal by an order dated 09.12.2016inter allaupheldthe disallowance of deletion of write back of provision for.bad and doubtful debts for the determination of book.profits under Section 115JB, disallowance of estimatedexpenses under Section 14A of the Act is to be addedback for the determination of book profits under Section.115JB and deleted the addition with respect to/disallowance of indexation benefit in respect of long|term capital gains under Section 10(38) for the determination of book profits under Section 115JB of the.Act. 4 Learned Senior counsel for the assesseesubmitted that|thefollowing.3ISSUCS|arise for.consideration in this appeal: i) Reduction of provision for bad and doubtful debtswritten back credited to profit and loss account forcomputation of book profit under Section 115JB li) Disallowance of estimated expenses under|Section 14A of the Act for computation of book profit:Under Section 115JB — fii) no notice under Section 143(2) of the Actissued on the revised return. It is further submitted that first issue involved in.this appeal has already been decided in favour of theassessee in the case of the assessee itself for other|Assessment Years. In this connection, reliance has been.placed on judgments dated 05.01.2021 passed in ITA No.409/2014, 05.02.2021 passed in ITA No.11/2021—and 19.04.2021 passed in ITA No.184/2021. It is also.Submitted that the second issue has also been answeredin favour of the assessee by a decision of this Court in.‘CIT Vs. GOKALDAS IMAGES P. LTD.' (2020) 122TAXMANN.COM 160 (KAR.).It is also Submitted that.no notice under Section 143(2) of the Act was issued on.the revised return and therefore, the order of theTribunal to the aforesaid extent be set aside and tne'matter be remitted to the Tribunal to consider the.aspect of non-issuance of notice under Section 143(2) of.the Act. No.409/2014, 05.02.2021 passed in ITA No.11/2021—and 19.04.2021 passed in ITA No.184/2021. It is also.Submitted that the second issue has also been answeredin favour of the assessee by a decision of this Court in.‘CIT Vs. GOKALDAS IMAGES P. LTD.' (2020) 122TAXMANN.COM 160 (KAR.).It is also Submitted that.no notice under Section 143(2) of the Act was issued on.the revised return and therefore, the order of theTribunal to the aforesaid extent be set aside and tne'matter be remitted to the Tribunal to consider the.aspect of non-issuance of notice under Section 143(2) of.the Act. 5. On the otner hand, learned counsel for the|revenue has not disputed the fact tnat first two issues.Nave been answered by this Court in favour of theassessee. However, with reference to the third aspectnamely absence of notice under Section 143(2) of theAct, it is submitted that the aforesaid issue nas been. rendered academic as the controversy has already been.decided on merits itn favour of the assessee. 6. We have considered the submissions made onboth sides. Admittedly, the first three issues involved in.this appeal are covered by decisions of this Court in the.case of the assessee as well as In|GOKALDAS IMAGESP. LTD.f SUDa. Therefore, substantial question of law.Nos.2 to 5 are answered against the revenue and infavour of the assessee. However, since the issue with.regard to validity of the proceedings on account of absence of notice under Section 143(2) of the Act has.not been examined by the Tribunal, therefore, we setaside tne order of the Tribunal and remit the matter to the Tribunal to consider the effect of the assumption ofjurisdiction by the Assessing Officer on account of non-issuance of notice under Section 143(2) of the Act.Since the matter is being remitted to the Tribunal ��� �!� �������������������� #�!� ���������������������!� ���������������/���������!������ ���� ���0�#��������������������������!�� ����������� �����������