Ita/78/2015 Of The Commissioner Of Income Tax v. M/S. Gokaldas Images Pvt.ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE J2ZND DAY OF NOVEMBER 202 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD BETWEEN: 1LT.A. NO.78 OF 2ZO1 1.|THE COMMISSIONER OF INCOME-TA® C.R. BUILDING, QUEENS ROAD BANGALORE. 2.|THE ADDL. COMMISSIONER OF INCOME-TAX RANGE-11, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE. .., APPELLANTS. (BY SRI. K.V. ARAVIND, ADV.,) AND" M/S. GOKALDAS IMAGES PVT. LTD., 7 & 12, INDUSTRIAL SUBURB|TUMKUR ROAD, YESHWANTHPURA.BANGALORE-560022 PAN: AAACG 6637(Q. (BY SRI. ASHOK A. KULKARNI, ADV.)| .., RESPONDENT THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,|1961L ARISING OUT OF ORDER DATED 26.09.2014 PASSED IN ITANO.667/BANG/2013aCONO.97/BANG/ 2013FORTHEASSESSMENT YEAR 2008-09, PRAYING TQ: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDER.PASSED BY THE ITAT, BANGALORE IN ITA NO.667/BANG/2013 &CO No.97/BANG/2013 DATED 26-09-2014 AND CONFIRM THEORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE.ORDER PASSED BY THE ADDL. COMMISSIONER OF INCOME TAX,RANGE-11, BANGALORE. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (nereinafter referred to as the Act for short)nas been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court videorder dated 05.10.2015 on the following substantial|question of law: (i) Whether on tne facts and in.circumstances of tne case, the Tribunal Isrignt in law in holding that the amount ofRs.62,84,681/- advanced by the assessee fo|M/s. Hinduja Realtors Pvt. Ltd, wnicn Is asister concern of the assessee, for payment.of Municipal Taxes, without charging anyinterest on the same Is to be treated asbusiness expenditure, without appreciatingthat the assessee does not have the Iiabilityof payment of Municipal Taxes anda the interest should have been charged on themoney advanced as held by the assessingautnority? (ii) Whether on the facts and in the.circumstances of the case, the Tribunal Isright in law in holding that the amount of.Rs.7,00,00,000 advanced by the assessee toM/s. Hinduja Investments Pvt. Ltd, which ts—a sister concern of the assessee, towardsacguisition/identifying and liaison of a textileApparel Park, without appreciating that theloan given was to help the sister concern.which is separate legal entity and assesseehad not benefit from it and as such assesseehad diverted the borrowed fund to thisextent? (iii) Whether on the facts and in the.circumstances of the case, the Tribunal wasright in law in holding that the disallowance.made under section 14A should not be addedto the Book Profits of the assessee undersection 115JB despite tne explicit provisionsof Clause (I) of Explanation (1) to sectionLTI5JB2 (iV) Whether on tne facts and in tne.circumstances of the case, the Tribunal wasright in law in deletion of portion of common.expenses allocated even when assessing.authority has rightly observed the expenses.incurred are to be apportioned among all the.units|In|theratioofthelrrespectiveturnovers 2 (Vv) Whether on tne facts and in tnecircumstances of the case, the Tribunal erred in giving relief to assessee in respect of set.of EOU profits against non EOU losses anabrought forward depreciation by followingthe decision of this Hon'ble Court in the caseof M/s. Yokogawa without appreciating that.the fact that deduction has to be allowedfrom the total income of the assessee and asper section 2(45) of the I.T. Act the totalincome should be computed from varioussources after set off of losses from onesource against income from other sources.under the same head of income in terms ofsection /09(1) and the order of the Hon'bleCourt has been challenged before Apex Court.by Revenue? (Vv) Whether on tne facts and in tnecircumstances of the case, the Tribunal erred in giving relief to assessee in respect of set.of EOU profits against non EOU losses anabrought forward depreciation by followingthe decision of this Hon'ble Court in the caseof M/s. Yokogawa without appreciating that.the fact that deduction has to be allowedfrom the total income of the assessee and asper section 2(45) of the I.T. Act the totalincome should be computed from varioussources after set off of losses from onesource against income from other sources.under the same head of income in terms ofsection /09(1) and the order of the Hon'bleCourt has been challenged before Apex Court.by Revenue? 2 |For the reasons assigned by us today inI.T.A.No.77/2015, the substantial questions of lawframed by this court are answered against the revenue.and in favour of the assessee. | In view of preceding analysis, the order passed bythe tribunal insofar as it pertains to finding recorded byit that an amount of Rs.7 Crores advanced by tneassessee to M/s Hinduja Investments Pvt. Ltd., forbusiness purposes and commercial expediency is herebyquashed and the matter is remitted to the tribunal to ������������������������������������������������'������'���������������%���������������������������� ��� �����������������������