Ita/226/2024 Of M/S Gopalan Enterprises (India) Pvt Ltd v. The Assistant Commissioner Of Income Tax

Digitallysigned byNARAYANAUMALocation:HIGH COURTsigned byNARAYANAUMALocation:HIGH COURT OFKARNATAKAKARNATAKA NC: 2024:KHC:49856-DBITA No. 226 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 4 DAY OF DECEMBER, 2024. PRESENT| THE HON'BLE MR JUSTICE V KAMESWAR RAO ANDTHE HON'BLE MR JUSTICE S RACHAIAH |INCOME TAX APPEAL NO. 226 OF 2024 BETWEEN: M/S GOPALAN ENTERPRISES (INDIA) PVT LTD (REPRESENTED BY ITS MANAGING DIRECTOR, CHERIYADTH GOPALAN| AGED ABOUT 84 YEARS S/O P K PANICKER)| NO. 5, RICHMOND ROAD| 48 MUSEUM ROAD| BANGALORE - 560 O25.) (A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956) APPELLANT. (BY SRI. VIKRAM HUILGOL, SR. ADVOCATE FOR; SMT. KRUTIKA RAGHAVAN, ADVOCATE) AND: 1.THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -11(3) BMTC BUILDING, SO FEET ROAD, 6 BLOCK. KORAMANGALA, BENGALURU - 560 095. NC: 2024:KHC:49856-DBITA No. 226 of 2024 .?.THE DEPUTY COMMISSIONER OF INCOME TAXCIRCLE -11(3)BMTC BUILDING,80 FEET ROAD, 6 BLOCK,KORAMANGALA,BENGALURU - 560 O95. 3.THE DEPUTY COMMISSIONER OF INCOME TAXCENTRAL CIRCEL -2(3)CENTRAL REVENUE BUILDING,QUEENS ROAD,|BENGALURU - 560 OOL1.CENTRAL CIRCEL -2(3)CENTRAL REVENUE BUILDING,QUEENS ROAD,|BENGALURU - 560 OOL1. . RESPONDENTS (BY SRI. RAVI RAJ Y V, ADVOCATE) THIS ITA IS FILED UNDER SEC.260 A OF INCOME TAX)ACT 1961, PRAYING TO SET ASIDE THE IMPUGNED ORDER OF|THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU ‘B™BENCH BEARING IN ITA NOS. 922 TO 924/BANG/2013, DATED|31.07.2023 FOR THE AYs 2006-07, 2008-09 AND 2009-10 TO)THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE, AS|ENCLOSED IN ANNEXURE A. THIS APPEAL, COMING ON FOR HEARING, THIS DAY,JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE V KAMESWAR RAOand |HON BLE MR JUSTICE S RACHAIAHand |HON BLE MR JUSTICE S RACHAIAH NC: 2024:KHC:49856-DBITA No. 226 of 2024 ORAL JUDGMENT (PER: HON BLE MR JUSTICE V KAMESWAR RAO) 1.The challenge in this appeal is to an order passed by the|Income Tax Appellate Tribunal (for short ‘ITAT’) dated|31.07.2023, whereby the Tribunal has disposed of the|appeal filed by the respondent — revenue py stating in|paragraphs No.7.5 and 7.6 as under: H7.5 It was submitted before us that assesseenas constructed functionally independent unit withseparateentry, exitwitningependaentinstrumentation, power backup, etc. Furtner, it wassubmitted that that power connection has beenobtained by building owner and consequently, powerconsumption bill has been received in the name ofthe building owner and later the building ownerappropriated the same among different units on theDasis of utilization of power whicn is evidenced bysub-meters provided to eacn tenant and the chargescollected from eacn unit accordingly. With regara towater consumption, it was submitteaq that waterconnection has peen obtained from BWSSB In thename of building owner and Dill has been receivedfor the consumption in the name of tne buildingOwner and the same has been appropriated toamong different tenants on the basis of actualconsumption, which is evidenced by separate sub- meters. With regara to independent door number, itwas submitted that building has been constructed asper the building plan sanctioned by the BBMP andaSame has been furnished to Investment Promotion &[InfrastructureDevelopmentCell,Ministry Of Commerce & Industries, Department of IndustrialPolicy & Promotion and to Central Board of DirectTaxes, so as to obtain approval for Industrial Parkfor construction of 4 independent units and theapproval has been granted on the basis of samebuilding plan furnished to them. As such, there wasno dispute on this regard for naving 4 independentunits. Further, it was submitted that eacn unit Isnaving independent entry and independent facilities.We are of the opinion that the Judgment relied bythe assessee’s counsel in the case of Primal ProjectPvt. Ltd. cited (supra) to be applied, if the followingconditions ere fulfiiied: a) Every unit should be independent’ withindependent facilitiesindependent facilities b) Independent power connection c) Independent door number d) Independent water connection 7.6 However, in the present case, the conaition|laid down as above in respect of si.nos.(a) & (Cc) Isfulfilled, Nowever, (Db) & (d) are reguireaq to bverified as to whether the submission of theadSSesSsswithregara.tOSeCUTrINGthePOWETconnection and water connection in the name ofbullding owner, thereafter, appropriation of theCharges to each unit on the basis of sub-meters. NC: 2024:KHC:49856-DBITA No. 226 of 2024 Accordingly, we remit this issue for limited purposeof verification of charges of power charges andwater charges on the basis of sub-meters installed inthe independent unit for consumption of power andwater. Accordingly, for this limited purpose, weremit this issue to the file of AO for freshconsideration. The appeals of the revenue are partlyallowed.” 2DTne following substantial questions of law Nave Dbeenraised by the appellant: “IT, Whether on tne facts and circumstances ofthe case, the Tribunal having recorded a findingthat the units in the Appellant's industrial parkare independent, erred in law in remanding the.matter to the Assessing Officer for furtherenguiry as to existence of unit-wise sub-meters for power and water connections wnen no sucn.condition exists under law for deduction under|section 80-IA(4) (lil)? [II. Whether on the facts and circumstances ofthe case, the Tribunal erred in law in remanding the matter to the Assessing Officer by failing tofollow the binding decision of this HonourableCourt in CIT v. Primal Projects (P.) Ltd. [2021]173 taxmann.com 314 rendered in similar set offacts? NC: 2024:KHC:49856-DBITA No. 226 of 2024 III, Without prejudice, whether on the facts and.circumstances of the case, the Tribunal erred in.law in remandaing the matter to the AssessingOfficerIn|contraventionandviolation.of|the directions issued by this Honourable Court.vide its’ earlier orders 2?circumstances of the case, the Tribunal erred in.law in remandaing the matter to the AssessingOfficerIn|contraventionandviolation.of|the directions issued by this Honourable Court.vide its’ earlier orders 2? 3.A reading of the said paragrapns, it is noted that the|Tribunal has remanded the matter back to the Assessing|Officer by stating that the Assessing Officer shall verify|tne power charges and water cnarges on the Dasis of sub-meters installed in the independent unit for consumption|Tribunal has remanded the matter back to the Assessing|Officer by stating that the Assessing Officer shall verify|tne power charges and water cnarges on the Dasis of sub-meters installed in the independent unit for consumption| of power and water.| 4According to Mr. Vikram Huilgol, learned Senior counsel |for the appellant that insofar as power consumption isconcerned, the appellant can satisfy the Assessing Officer|as|there|IS.an)independent|meterrecordingtheconsumption of electricity in the unit occupied by the|appellant. But insofar as the water charges are.concerned, as there are no sub-meters in the whole of thepremises though units are independent, he cannot satisfy|the Assessing Officer. According to him, the provisions|of Bangalore Water Supply and Sewerage Act, 1964 and_for the appellant that insofar as power consumption isconcerned, the appellant can satisfy the Assessing Officer|as|there|IS.an)independent|meterrecordingtheconsumption of electricity in the unit occupied by the|appellant. But insofar as the water charges are.concerned, as there are no sub-meters in the whole of thepremises though units are independent, he cannot satisfy|the Assessing Officer. According to him, the provisions|of Bangalore Water Supply and Sewerage Act, 1964 and_ NC: 2024:KHC:49856-DBITA No. 226 of 2024 even as per the circulars issued by the said Board, they|do not contemplate the installation of the sub-metres in a|premises, having different units. NC: 2024:KHC:49856-DBITA No. 226 of 2024 even as per the circulars issued by the said Board, they|do not contemplate the installation of the sub-metres in a|premises, having different units. 5]He also refers to Regulation 43-A and 43-B of the|Bangalore Water Supply Regulation, 1965, which reads| as under:- “1. Insertion of new Regulation 43-A and 43-B:-|In the Bangalore Water Supply Regulation, 1965,|after regulation 43, the following snall be inserted, namely:- “43-A. Obligation to provide internal-meters: - Every owner or occupier of a building naving sital)area of not less than 2400 square feet and building|naving tnree or more houses or every ownerproposes to construct a building on a sital area ofnot less than 1200 square feet and building having.three or more houses shal/ install thelr own tnternalmeters for judicious consumption of water, within|such date as may be notified by the State)Government.However,thereadingsOf|SUCDNinternal-meters shail not be used for billing or any|case to dispute the readings of the meter provided|by the Board, in any legal proceedings. 43-B. Obligation to provide Automatic water level|contro! system:- Every owner or occupier of a)building snail install Automatic water level control system or any other suitable devices to prevent tneoverflow of water, automatically from the over head|tanks. The punisnment for breacning this regulation|Shall be imposed under regulation 55. Further, if)the breach is continued, action snall be taken under|regulation 44. “overflow of water, automatically from the over head|tanks. The punisnment for breacning this regulation|Shall be imposed under regulation 55. Further, if)the breach is continued, action snall be taken under|regulation 44. “ 6.He states that the matter be remanded back to the [TAT|instead of Assessing Officer to consider the issue on the|above two aspects on the basis of documents to be filed|by the appellant herein.instead of Assessing Officer to consider the issue on the|above two aspects on the basis of documents to be filed|by the appellant herein. J.He also states that the ITAT must decide the issue on the|aboveCWO,aspectsindependentlywithoutbeinginfluenced by any observations made by the ITAT in|paragrapn No.6 of the impugned order.aboveCWO,aspectsindependentlywithoutbeinginfluenced by any observations made by the ITAT in|paragrapn No.6 of the impugned order. 8.The learned counsel for the respondent/revenue do not|contest the submission made by Mr. Vikram Huilgol|contest the submission made by Mr. Vikram Huilgol| 9)Accordingly, we modify the order passed by the ITAT to|the extent that the matter shall be considered by the|ITAT afresh on the above two aspects and not by the|Assessing Officer. It shall decide the issue in accordance|with law. Liberty is granted to the appellant to file such|the extent that the matter shall be considered by the|ITAT afresh on the above two aspects and not by the|Assessing Officer. It shall decide the issue in accordance|with law. Liberty is granted to the appellant to file such| NC: 2024:KHC:49856-DBITA No. 226 of 2024 documents as deem appropriate in support of its case ontne two aspects. Liberty is also granted to the revenue, if |need be, to file documents which they intend to rely|Upon. 10,On filing of the documents by both the parties, the|Tribunal snall decide the issue to the extent on wnichnremand was made by the Tribunal without’ beinginfluenced by any observation made in the impugned|order. Appeal is disposed of. |Tribunal snall decide the issue to the extent on wnichnremand was made by the Tribunal without’ beinginfluenced by any observation made in the impugned|order. Appeal is disposed of. | UNList No.: 1 S| No.: 14) Sd/-|(V KAMESWAR RAO).JUDGE. Sd/-|(S RACHAIAH)JUDGE.