Whether On The Facts And In The Circumstances Of The Case, The Tribunal’s Order Can Be Said As Perverse In Nature In Setting Aside Disallowance Made Under Secti v. Nc: 2024:Khc:41542-Dbita

Digitallysigned byBHARATHI SLocation:HIGHCOURT OFKARNATAKA ITA No. 449 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30 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. 449 OF 2023 BETWEEN: 1. THE PRL. COMMISSIONER OF INCOME TAX 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA BENGALURU 560 095 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -3(1) 2nd FLOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA BENGALURU 560 095 …APPELLANTS (BY SRI. DILIP M.,ADVOCATE A/W SRI. RAVIRAJ Y V, ADVOCATE) AND: M/S IBM INDIA PVT. LTD NO.12 SUBRAMANYA ARCADE, BANNERGHATTA ROAD, BENGALURU 560 029 PAN AAAC1 4403L …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR.,ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE TO INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 2041/BANG/2016 DATED 18/07/2022 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BENGALURU AND ETC. THIS APPEAL, COMING ON FOR ADMISSION, 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. Dilip. M., along with Sri. Raviraj. Y.V,. for appellants/Revenue and learned counsel Smt. Tanmayee Rajkumar, learned counsel for the respondent/assessee. 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 18.07.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A No.2041/Bang/2016 for the assessment year 2011-12, raising the following substantial question of law: - 3 - “1. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature in setting aside disallowance made under section 14A of the Act by following the decision in case of Chemvest Ltd v/s CIT (reported in 317 ITR page 33) by holding that Section 14A disallowance cannot be done when assesse is not having exempt income for period under consideration ignoring the findings of the assessing authority and CBDT Circular No.5/2014, dated 11/02/2014, whereby is its clarified that Rural 8D read with section 14A of the Act provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income?” circumstances of the case, the Tribunal’s order can be said as perverse in nature in setting aside disallowance made under section 14A of the Act by following the decision in case of Chemvest Ltd v/s CIT (reported in 317 ITR page 33) by holding that Section 14A disallowance cannot be done when assesse is not having exempt income for period under consideration ignoring the findings of the assessing authority and CBDT Circular No.5/2014, dated 11/02/2014, whereby is its clarified that Rural 8D read with section 14A of the Act provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income?” 3. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained 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. 3. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained 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 BS List No.: 4 Sl No.: 19