Ita/578/2022 Of The Pr. Commissioner Of Income Tax v. M/S Kontoor Brands India Pvt Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:39691-DBITA No. 578 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 578 OF 2022 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX KORMANGALA BANGALORE. KORMANGALA BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-4(1)(1) BANGALORE. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.) AND: M/S. KONTOOR BRANDS INDIA PVT. LTD., (FORMERLY VF BRANDS INDIA PVT. LTD.,) BAGMANE TECH PARK BLOCK ‘B’, LEVEL 9, 8 FLOOR CV RAMAN NAGAR BANGALORE-560093. …RESPONDENT THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 23.09.2021 PASSED IN IT(TP)A NO.1285/BANG/2017 ASSESSMENT YEAR 2012-2013, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/ OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 23.09.2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO. 1285/BANG/2017 (ANNEXURE-A) FOR A.Y. 2012-2013 AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.E.I.Sanmathi., for appellants/Revenue. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 23.09.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.1285/Bang/2017) for the assessment year 2012-13, raising the following substantial questions of law: - 3 - ITA No. 578 of 2022 “1. Whether in the present facts and circumstances of the case, the Tribunal is correct in law in holding that depreciation on design and technical knowhow, is allowable under Section 32(1)(ii) of the Act in view of explanation 4 to Section 32 of the Act when assessee has not been able to demonstrate that it has acquired any technical knowhow or the same has been put to use by the assessee? circumstances of the case, the Tribunal is correct in law in holding that depreciation on design and technical knowhow, is allowable under Section 32(1)(ii) of the Act in view of explanation 4 to Section 32 of the Act when assessee has not been able to demonstrate that it has acquired any technical knowhow or the same has been put to use by the assessee? 2. Whether in the present facts and circumstances of the case, the order passed by Tribunal can be said as perverse in law in allowing claim of depreciation on design and technical knowhow in ignoring that the same does not fall under ‘Any other business or commercial rights of the similar nature’ stipulated under Section 32(1)(ii) of the Act read with Explanation 4 to Section 32?” circumstances of the case, the order passed by Tribunal can be said as perverse in law in allowing claim of depreciation on design and technical knowhow in ignoring that the same does not fall under ‘Any other business or commercial rights of the similar nature’ stipulated under Section 32(1)(ii) of the Act read with Explanation 4 to Section 32?” 3. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 3. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 4. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 5. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MPK CT:bms List No.: 2 Sl No.: 2