Wp/146983/2020 Of Belgaum Smart City Ltd v. The Income Tax Officer

Digitallysigned byVISHALNINGAPPAVISHALPATTIHALNINGAPPALocation:PATTIHALDharwadDate:2023.03.1510:34:07+0530 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 14 DAY OF MARCH, 2023 BEFORE THE HON'BLE MR JUSTICE M.I.ARUN -WRIT PETITION NO. 146983 OF 2020 (TIT) BETWEEN: BELGAUM SMART CITY LTD., A COMPANY REGISTERED UNDER THE COMPANIES ACT, 2013 REPRESENTED BY ITS MANAGING DIRECTOR, SHRI SHASHIDHAR N KURER, AGE: 40 YEARS, OCC: SERVICE, R/O: PWD QUARTERS, VISHVESWARAYA NAGAR, BELAGAVI-590001. … PETITIONER (BY SRI. SANGRAM S.KULKARNI, ADVOCATE) AND: 1. THE INCOME TAX OFFICER, WARD 6, BELAGAVI, KHIMJIBHAI COMPLEX, OPP. CIVIL HOSPITAL, DR.AMBEDKAR ROAD, BELAGAVI-590001. 2. THE COMMISSINER OF INCOME TAX (APPEALS), KHIMJIBHAI COMPLEX, OPP. CIVIL HOSPITAL, DR.AMBEDKAR ROAD, BELAGAVI-5902001. … RESPONDENTS (BY SRI. Y.V. RAVIRAJ, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI AND QUASH THE IMPUGNED ORDER DATED 13/02/2020 BEARING NO.ITBA/ COM/ F/ 17/ 2019-20/ 1025123781(1) VIDE ANNEXURE-J ISSUED BY THE RESPONDENT & ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING B-GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER 1.The petitioner is a Company registered under the provisions of the Companies Act, 2013 and is a Company whose 50% of the shares are prescribed by the Central Government and another 50% is prescribed by the State Government. It is established for the purpose of developing the City of Belagavi, as a Smart City. 2.The petitioner received certain grants from Central Government towards development of Smart City in the year 2016-17. However, as the scheme was not formulated by the Government for which the grant had to be applied, an amount of Rs.383,22,56,443/- was kept in Fixed Deposit and it earned an interest of 13,72,99,699/-. The first respondent has assessed the said income for income tax. The petitioner contending that the said income is exempted from taxation has preferred an appeal before the second respondent. Before filing of the appeal, as the petitioner expressed a desire to file an appeal before the first respondent, the impugned order dated 13.02.2020 bearing No. ITBA/ COM/ F/ 17/ 2019-20/ 1025123781(1), Vide Annexure-J to the writ petition was passed by the first respondent, wherein a stay was granted on the order of the first respondent subject to deposit of 20% of the amount assessed. However, as it was found that appeal was not filed immediately, the entire amount of tax is recovered by the first respondent. Thereafter, the petitioner has preferred an appeal before the second respondent challenging the assessment order and also has filed this writ petition challenging the impugned order. The appeal has now been assigned to ‘The National Faceless Appeal Center’. 3.During the course of arguments, attention of the Court is drawn to a letter dated 2[nd] February 2022 issued by the Government of India to all CEOs’ of Smart Cities stating that as per Rule 230(8) of GFR, 2017, all interests against advances released to any granting institutions should be remitted to Consolidated Fund of India and it is submitted that the entire interest earned, which is assessed for tax has to be now remitted to Government of India. 4.Per contra, the advocate for respondents submits that the writ petition has become infructuous as the entire amount due towards income tax has been recovered from the petitioner and that an appeal is pending before the ‘The National Faceless Appeal Center’ and the question of setting aside the impugned order directing the petitioner depositing 20% of the amount does not arise and the petitioner can place the letter issued by the Government referred to in paragraph No.3 supra before the appellate authority for suitable orders, with a direction to the appellate authority to decide the matter in a time bound manner. India and it is submitted that the entire interest earned, which is assessed for tax has to be now remitted to Government of India. 4.Per contra, the advocate for respondents submits that the writ petition has become infructuous as the entire amount due towards income tax has been recovered from the petitioner and that an appeal is pending before the ‘The National Faceless Appeal Center’ and the question of setting aside the impugned order directing the petitioner depositing 20% of the amount does not arise and the petitioner can place the letter issued by the Government referred to in paragraph No.3 supra before the appellate authority for suitable orders, with a direction to the appellate authority to decide the matter in a time bound manner. 5.Admittedly, ‘The National Faceless Appeal Center’ is seized of the matter. Under the circumstances, it would be appropriate to direct the appellate authority to hear the matter and dispose off the same in accordance with law by also taking into consideration the letter produced by the petitioner in the course of the arguments. Hence, following: ORDER (i)The petitioner shall be given an opportunity to file its rejoinder to the appeal filed by it before The National Faceless Appeal Center. opportunity to file its rejoinder to the appeal filed by it before The National Faceless Appeal Center. (ii)The National Faceless Appeal Center shall dispose off the appeal within two months after the petitioner files its rejoinder. dispose off the appeal within two months after the petitioner files its rejoinder. (iii)Writ petition is disposed off accordingly. Sd/- JUDGE Vnp* List No.: 1 Sl No.: 40