Ita/502/2009 Of The Commissioner Of Income Tax v. M/S.islamic Academy Of Education

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATHRD THIS THE 2 DAY OF AUGUST, 2015) PRESENT THE HON'BLE MR. JUSTICE VINEET SARAN AND| THE HON’BLE MR. JUSTICE B.MANOHAR- ITA NO. 502 / 2009 BEIWERE 1THER COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, CR BUILDING, ATTAVARA MANGALORE, ”THER DY.COMMR. OF INCOME TAX CENTRAL CIRCLE, C R BUILDING ATTAVARA, MANGALORE APPELLANTS (BY SRI K V ARAVIND & EISANMATHI, ADVS.) AND M/S.ISLAMIC ACADEMY OF EDUCATIONNITHYANANDA NAGAR, DERALAKATTEMANGALORE, ~~RESPONDENT (BY SRI S.PARTHASARATHI, SMT. JINITA CHATTERJI &SRI V.K.-GURUNATHAN, ADVs.) THIS ITA IS FILED UNDER SKC.260-A OF INCOME TAX.ACT 1961, ARISING OUT OF ORDER DATED: 11.5.2009 IN ITA 903/BANG/2007 FOR THE ASST. YEAR 1999-2000 PRAYING TO}ALLOW THER APPEAL AND SET ASIDE THE ORDERS PASSED BYTHR [TAT CONFIRMING THR ORDER OF THER APPHKLLATECOMMISSIONER AND CONFIRM THER ORDER PASSED BY THEDEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE,|MANGALORE. THISITACOMINGONKOR,HEARINGTHIS|VINFFT SARANJ.DELIVERED THER FOLLOWING: DAY, | JUDGMENT Heard Sri K.V.Aravind, learned counsel for the appellants| and Sri S.Parthasarthi, learned counsel for the respondent andperused the record. 2 _This appeal has beenADMITTEDon the following questions of law: 7Whether the Appellate Authorities werecorrect in law in dtrecting in revenue’s appeal that thestatus of the assessee should be taken as “Trust” as|against AOP adopted in the assessment order, withoutappreciating that the assessee has contravened theprovisions of section 11(5) rw.s. 13(d)(t) and 13(2)(b)|of the Act in view of investment made in the shares ofM/s. Yenepoya Institute ofMedical Science and Research(P) Ltd., and continued to hold them after 31.12.19702 2.Whether the Appellate Authorities were|correct in not appreciating that the investment made bythe assessee in the shares ofM/s. Yenepoya Institute ofMedical Science and Research (P) Lid., exceeded 5% of|the share capital ofthis Private Limited company, earlierknown as Karnataka Hotels Pot. Lid, if theinvestments ofpersons mentioned in section 13(3)(d) andalso of “relate” of trustees/authors ete., as perExplanation 1 betow Section 13(7) ofthe Act are takenawnto consideration? 3.Whether the Appetate Authorities wereright in law in holding that “borrowed capital” needs tobe taken into consideration while deciding whether sharesheld by the trust exceeds 5% of the share capital of thecompany or note 4Whether the Appellate Authorities were|correct in law in upholding the oraers of CII(A), anddeleting the addition of Rs.1,28,25,400/- even thoughthe assessee has notfiled audit report in Form No.10Bas required u/s.12A(b) of the Act and did notproducethe account books andparticulars calledfor u/s.142(1)of the Act at the time of assessment and also in view ofseveral discrepancies in accounts and seizure ofunexplained cash in search conducted u/s.132 on21.09.2005?” 4Learned counsel for the parties have jointly submitted that the first question involved in this appeal is covered by the decision of this Court in the case ofCommissioner of Income Tax -vs- M/s Islamic Academy ofEducation in ITA No.805/2008 decided on 09.09.2014. AFor the reasons given in the aforesaid judgment, thefirst question of law is decided in favour of the assessee andagainst the revenue. | 5Learned counsel for the parties have further agreed that the second and third questions are covered by the decision of.this Court rendered in the case of theCommissioner ofIncome- Tax -vs- Islamic Academy ofEducation in ITA No.86/2008decided on 03.06.2014.As such, for the reasons given in the)aforesaid judgement, the aforesaid two questions-2 and 3 are alsodecided in favour of the assessee and against the revenue. | 6.|As regards the fourth question, learned counsel forthe parties do not dispute the fact that the question in this regardhas been decided by the Tribunal without considering the facts of No.805/2008 decided on 09.09.2014. AFor the reasons given in the aforesaid judgment, thefirst question of law is decided in favour of the assessee andagainst the revenue. | 5Learned counsel for the parties have further agreed that the second and third questions are covered by the decision of.this Court rendered in the case of theCommissioner ofIncome- Tax -vs- Islamic Academy ofEducation in ITA No.86/2008decided on 03.06.2014.As such, for the reasons given in the)aforesaid judgement, the aforesaid two questions-2 and 3 are alsodecided in favour of the assessee and against the revenue. | 6.|As regards the fourth question, learned counsel forthe parties do not dispute the fact that the question in this regardhas been decided by the Tribunal without considering the facts of the case on hand but the same has been done basing it on someother order adjudicating cancellation of registration under Section12A of the Income Jax Act, 1961 (for short ‘the Act’). foLearned counsel for the parties thus submit that thefourth question of law raised in the appeal may be remanded backto the Tribunal for fresh adjudication after hearing it as de novo.As such, without expressing any opinion with regard to questionNo.4, it is directed that the Tribunal shall reconsider the said issueand pass fresh orders in accordance with law without beinginfluenced by the order passed with regard to grant of registrationunder Section 12A of the Act. The appeal standsdisposed of. Sd/-|JUDGE Sd/-JUDGE) TL