Shri v. Madhusudhanreddy (Huf)

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 27 DAY OF FEBRUARY 2071.PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’‘’BLE MR. JUSTICE NATARAJ RANGASW AILT.A. NO.293 OF 2013 BETWEEN: 1.|COMMISSIONER OF INCOME TAX| C.R. BUILDINGS -III QUEENS ROAD BANGALORE-560001. 2 |DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7(2) BANGALORE. (BY SRI. E.R. INDRAKUMAR, SR. COUNSEL A/W SRI. E.I. SANMATHI, ADV.,) .., APPELLANTS. AND" SHRI. V. MADHUSUDHANREDDY (HUF) NO.502, CMH ROADBANGALORE. .., RESPONDENT (BY SRI. ASHOK A. KULKARNI, ADV.)| THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX|ACT 1961, ARISING OUT OF ORDER DATED 08.02.2013 PASSEDIN ITA NO.149/BANG/2011 FOR THE ASSESSMENT YEAR 2007-08,PRAYING TO: | (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW,STATED THEREIN. | (ii) SET ASIDE THE APPELLATE ORDER OF THE ITAT, ‘A’)BENCH,|BANGALORE.IN|APPEAL|PROCEEDINGS»TTA!NO.149/BANG/2011 DATED 8.2.2013, AS SOUGHT FOR IN THIS)APPEAL. THIS ILT.A. COMING ON FOR’ HEARING, THIS DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short)has been preferred by the revenue. The subject matter|of the appeal pertains to the Assessment year 2007-08.The appeal was admitted by a bench of this Court videorder dated 14.08.2013 on the following substantial|questions of law:| “(D)WhetherOf)thefactsandcircumstances of the case, the Tribunal Iscorrect in law in not recognizing the colourable|device employed by the assessee as envisagedby the Hon'ble Apex Court in case of McDowell& Co Ltd (reported in 158 ITR page 148) whichresulted in massive tax evasion in the guise of.tax|planninglacedwithmultilayered|transactions 2". “(i)WhetherOf)thefactsandcircumstances of the case, the Tribunal Iscorrect in law in not considering the fact thatthe shares belonging to the assessee wereultimately transferred to Godrej Group as partof sale of business of the Nutrine Group to.Godgrej Group, routed through a series oftransactions including the reconstitution of thedefunt firm M/s. B.V. Reddy Enterprises to.accommodate the shareholders of M/s. NutrineConfectionery Co. P. Ltd and guising thenumerous transactions as genuine in quickspan of time, with a sheer motive of avoidanceof payment of actual capital gain?’.| “(CHD)”WhetherOf)thefactsandcircumstances of the case, the Tribunal Iscorrect in law in holding that the entire series|of transactions by which the shares of NCCPLwere ultimately transferred to GBFL were allvalid and such an arrangement to avoidpayment of taxes on account of correct.quantum of capital gain that would result ontransfer of shares of NCCPL to GBFL wes.permitted and within the framework of law?”. “(lv) Whether in the given facts and.circumstances of the case, the Tribunal Iscorrect in law in holding that the entire seriesof transactions by which the shares of Nutrine|ConfectionaryCo. P|Ltdwereultimatelytransferred to GBFL were all valid and such a2course was permitted and within the frame.work of law and that the transaction was not|colourable or dubious device or subterfuge andwerelegaland|valid withoutcompletelyappreciating the complete though process andmotive behind the series of transactionsentered in to by the assessee and family.members?” “(V)Whether in the given facts andcircumstances of the case, the Tribunal Iscorrect in law in allowing the appeal of the.assessee with reference to addition on account|OF|Nor)existentliability.amountto.Rs.1,77,7/8/- without appreciating that the)assessee had not been able to prove the same|beyond doubt?". 2 |For the reasons assigned by us in thejudgmentpassed|today|InI.T.A.No.291/13,.the substantial question of law framed by a bench of this.court is answered against the revenue and in favour ofthe assessee. In the result, we do not find any merit in.this appeal, the same fails and is hereby dismissed. Sd/-JUDGE. SS| Sd/-JUDGE.