Ita/325/2019 Of The Pr. Commissioner Of Income-Tax, Cit (A) v. M/S. Bangalore Housing Development And Investments

Digitally signedby ANUSHA VLocation: HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29 DAY OF MAY, 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. 325 OF 2019 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX CIT(A), 5 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(2)(1), 2 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095. …APPELLANTS (BY SHRI. M. DILIP, STANDING COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL) AND: M/s. BANGALORE HOUSING DEVELOPMENT AND INVESTMENTS NO.10/1, LAKSHMINARAYANA COMPLEX PALACE ROAD BENGALURU-560 052. PAN-AAGFB 0819A …RESPONDENT (BY SHRI. ARVIND KAMATH, SENIOR ADVOCATE FOR SHRI. POPAT PRASHANT DHARMASINH, ADVOCATE) THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 07.11.2018 PASSED IN ITA NO.556/BANG/2018 FOR THE ASSESSMENT YEAR 2013-2014, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.556/Bang/2018 DATED 07.11.2018 FOR ASSESSMENT YEAR 2013-14 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2)(1) AND ETC., THIS APPEAL IS COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Revenue challenging the order dated November 7, 2018 in ITA No.556/Bang/2018 passed by the ITAT[1], Bengaluru, for A.Y.2013-14 has been admitted to consider following questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in allowing expenses claimed by the assessee can be held as “Business expenses” and same can be allowed to be set off against income from Commission/Income from other sources when there is no nexus between the expenses and the income and same is not allowable under the provisions of section 37(1) of the Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in allowing the expenses claimed as business expenses, when the assessee had ceased to have active business 1 Income Tax Appellate Tribunal activities in the earlier years and did not show any revival during the relevant financial year? revival during the relevant financial year? 3. Whether on the facts and in the circumstances of the case, expenses claimed by the assessee can be held as “Business expenses” when the assessee had no reported business activities during the relevant financial year and income disclosed was from commission earned and income from other sources?” 2. Heard Shri M.Dilip, learned standing counsel for the Revenue and Shri Arvind Kamath, learned Senior Advocate for the assessee. the Revenue and Shri Arvind Kamath, learned Senior Advocate for the assessee. 3. Briefly stated facts of the case are, assessee is a partnership firm engaged in Real Estate Business. For A.Y.2013-14, assessee claimed expenditure of Rs.3,71,23,836/- and it was disallowed. The CIT(A)[2]allowed the appeal by following the assessment order for A.Y.2008-09. Revenue challenged the CIT(A)’s order with regard to expenditure of Rs.3,71,23,836/- claimed by the assessee and assessee challenged the CIT(A)’s order on different aspect. The ITAT has disposed of both appeals by the common impugned order. 2 Commissioner of Income Tax (Appeals) 2. Heard Shri M.Dilip, learned standing counsel for the Revenue and Shri Arvind Kamath, learned Senior Advocate for the assessee. the Revenue and Shri Arvind Kamath, learned Senior Advocate for the assessee. 3. Briefly stated facts of the case are, assessee is a partnership firm engaged in Real Estate Business. For A.Y.2013-14, assessee claimed expenditure of Rs.3,71,23,836/- and it was disallowed. The CIT(A)[2]allowed the appeal by following the assessment order for A.Y.2008-09. Revenue challenged the CIT(A)’s order with regard to expenditure of Rs.3,71,23,836/- claimed by the assessee and assessee challenged the CIT(A)’s order on different aspect. The ITAT has disposed of both appeals by the common impugned order. 2 Commissioner of Income Tax (Appeals) 4. Shri Dilip for the Revenue submitted that assessee had earned only a sum of Rs.5,11,008/- for A.Y.2013-14 and showed an expenditure of Rs.3,71,23,836/- which is grossly disproportionate to the earnings of the firm. Only in order to reduce taxable rental income of Rs.6.98 Crores, assessee had claimed expenditure. The CIT(A) erred in following the earlier assessment order for A.Y.2008-09. He argued that each assessment year is different and there will be no precedent so far as computation of expenditure is concerned. The AO[3] has rightly considered the expenditure for the relevant year and disallowed the same and that the ITAT has fallen into the same error by dismissing the Revenue’s appeal. He submitted that ITAT has simply extracted the order passed by the CIT(A). Therefore, impugned order is unsustainable in law. 5. In reply, Shri Kamath, adverting to paragraphs 10 and 11 of the ITAT’s order, submitted that in identical circumstances for A.Y.2008-09, assessee had 3 Assessing Officer incurred expenditure and the same was allowed. The ITAT has extracted the order passed by the CIT(A) on Grounds No.5 to 9 and rightly held that on the principle of consistency, the order passed by the CIT(A) did not call for any interference. He pointed out that the ITAT has recorded that learned DR could not point out any difference in facts before the ITAT vis-a-visA.Y.2008-09. Therefore, no interference is called for in this appeal. 6. We have carefully considered rival contentions and perused records. 7. Undisputed facts of the case are, admittedly, assessee had incurred certain expenditure for A.Y.2008-09 and the same was allowed by the AO and it has remained unchallenged. The ITAT, which is the last fact finding authority, has recorded a fact at para 11 of the impugned order that learned DR could not point out any difference in the facts with regard to the A.Y.2008-09 and A.Y.2013-14. The CIT(A)’s order has been upheld on the ground of principle of consistency. In that view of the matter, in our opinion, no substantial question of law arises for consideration. Resultantly, this appeal must fail and it is accordingly dismissed. No costs. Sd/- JUDGE Sd/- JUDGE AV List No.: 1 Sl No.: 31