Ita/868/2008 Of The Commissioner Of Income Tax v. M/S Medical Relief Society Of South Kanara

1 IN THER HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15 DAY OF DECEMBER, 2014. PRESENT. THE HON’BLE MR. JUSTICE NK. PATIL AND| THE HON’BLE MRS. JUSTICE RATHNAKALA ITA NO. 868/2008 BEITWEEN 1.)THE COMMISSIONER OF INCOME TAXC.R. BUILDING, ATTAVAR, C.R. BUILDING, ATTAVAR, MANGALORE. 2THER DEBPUTY COMMISSIONER OFINCOME TAX, CIRCLE - 1.INCOME TAX, CIRCLE - 1. UDUPL. APPELLANTS. (BY SHRI. JEEVAN. J. NEERALGI, ADVOCATE)| ANI] M/S. MEDICAL RELIEF SOCIETY OF SOUTH KANARAMADHAVANAGAR, MANIPAL, SOUTH KANARA DISTRICT. — RESPONDENT (BY SHRI. S. PARTHASARATHI, ADVOCATE) THIS ITA IS FILED U/S. 260-A OF LT.ACT, 1961)AGAINST THR ORDER DATED 25-04-2008 PASSED INITA NO.1243/BANG/2007 FOR THE ASSESSMENT YEAR.2003-2004, TO (dd) FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED THEREIN (I) ALLOW THERE APPEAL AND SKIT ASIDE THER ORDER PASSEDTHE ITAT BANGALORE IN ITA NO.1243/BANG/2007DATED 25-04-2008 IN THE INTEREST OF JUSTICE. THIS APPKAL COMING ON FOR HERARING THISDAY,N.K. PATIL J.,DELIVERED THER FOLLOWING -: JUDGMENT In this appeal, the appellants are questioning the|correctness of the order dated 25[th ]April 2008, bearing ITANo.1243/BANG/2007, passed by the Income Tax AppellateTribunal, Bangalore, and confirm the order passed by theAssessing Officer. The following substantial questions of law areraised in this appeal. “T| whether the appellate authorities were fight inlaw in allowing carry forward and set-off of capitalexpenditure claim ignoring the provision of Section37(1) of the Act, which specifically prohibitsallowing of capital expenditure 1n computing theincome? 2| Whether the Appellate authorities were right inallowing carry forward and set off capitalexpenditure when the act does not provide for suchtreatment and was inadmissible per se and void abinitio 1n lawe”’ 2. The facts in brief are that, the Assessing Officer has|passed the assessment order holding that the respondent-Institution is not entitled to exemption in violation of Section10(23C)(via) of the Act. Not being satisfied with the order passedby the Assessing Officer, respondent filed an appeal before theAppellate Commissioner. The Appellate Commissioner in turnafter considering the material on record set aside the order passedby the Assessing Officer, holding that the exemption obtained bythe respondent is in accordance with the provisions of the Act.Not being satisfied with the order passed by the AppellateCommissioner, the appellants herein have filed the appeal beforethe Income Tax Appellate Tribunal. The Income Tax AppellateTribunal in turn, after hearing the parties, dismissed the appeals, |confirming the order passed by the Appellate Commissioner. Notbeing satisfied with the order passed by the AppellateCommissioner and its confirmation by the Income Tax AppellateTribunal, Bangalore, the appellants herein felt necessitated topresent this appeal seeking appropriate relief as stated supra. 3. We have heard the learned counsel appearing for the|appellants and the learned counsel appearing for the respondent. 3. We have heard the learned counsel appearing for the|appellants and the learned counsel appearing for the respondent. 4. Learned counsel appearing for appellants and learned|counsel appearing for respondent submitted that, the Revenue haschallenged the benefit of carry forward of set-off of capitalexpenditure incurred while computing the net income of therelevant years for the purpose of Section 11 of the IT Act. TheRespondent-Institution has been granted the Certificate underSection 10(23C)(v1) of the Act by the Chief Commissioner for therelevant years. However, when the Assessing Officer passed theassessment orders for the relevant years, the Certificate was notavailable to the Assessing Officer. As on the date of passing the |Assessment Orders, the Certificate granted by the ChiefCommissioner of Income-Tax, Panaji, was not before theAssessing Officer. Hence, the said Certificate was not takencognizance by the Assessing Officer while passing the AssessmentOrders. Consequently, the said authority had made _ thdisallowanceas|atoresaicd.However,subsequentlythe|Respondent-Institution obtained the Certificate and consequently the entire income of the Institution 1s exempted from taxation.Therefore, they submitted that the matter may be remanded backto the Assessing Officer with a direction to consider the legalconsequences of the Certificate granted under Section 10(23C) (iv),taking into consideration subsequent developments and pass freshorders. 5. The submission made by the learned counsel appearing|for both the parties, as stated supra, 1s placed on record. 6. In the light of the submission of learned counsel)appearing for both the parties, without expressing any opinion onthe merits or demerits of appellants’ case, 1t would suffice for thisCourt if the impugned order are set aside and the matter isremanded back to the Assessing Officer for fresh consideration,in accordance with law. 7. Having regard to the facts and citcumstances of the) case, as stated supra, the appeal filed by appellants 1s allowed; The impugned order dated 25[./]April 2008, | passed by the Income Tax Appellate Tribunal,Bangalore Bench ‘A’, vide Annexure A, order dated 6 41[1.]August 2007, passed by the Commissioner of, Income-Tax (Appeals)-VI, Bangalore vide AnnexureD and the order dated 30[./]January 2006 passedunder Section 143 r/w. Section 153-A of LT. Act bythe Assistant Commissioner of Income Jax, Central|Circle 2(3), Bangalore, are all hereby set aside; The matter stands remitted back to the)Assessing Officer for reconsideration afresh, and topass appropriate orders, in accordance with law,after hearing both the parties, as expeditiously aspossible, at any rate, not later than stx months fromthe date of receipt of a copy of this judgment; However, it is needless to clarify that the two|substantialquestions|otlawraised 1n|thememorandum of appeal are left open and it 1s theduty of the Assessing Officer to consider the sameafter affording opportunity of hearing to both thepatties afresh and to pass appropriate orders inaccordance with law. �55�./4�;9-.4-.09-1�86:4=�>?�>9./�./4�326.041� 264�54<.�934-�����������������!&�������������������!&��������������������������������������������������%M�