Karnataka High Court
The Pr Commissioner Of Income Tax ... vs M/S Century Real Estate Holdings Pvt Ltd on 5 December, 2023
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
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NC: 2023:KHC:43893-DB
ITA No. 225 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF DECEMBER, 2023
PRESENT
THE HON'BLE MR JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA
INCOME TAX APPEAL NO. 225 OF 2023
BETWEEN:
1. THE PR.COMMISSIONER OF INCOME TAX
CENTRAL, 3RD FLOOR, C R BUILDING
QUEENS ROAD, BENGALURU-560 001
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE-2(2), 3RD FLOOR, C R BUILDING
QUEENS ROAD, BENGALURU-560 001
...APPELLANTS
(BY SRI.DILIP M., JR. STANDING COUNSEL)
AND:
M/S CENTURY REAL ESTATE
HOLDINGS PVT LTD
NO.10/1, GROUND FLOOR
LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
Digitally signed by BENGALURU-560 052, PAN-AADCC 0651M ...RESPONDENT
MALA K N
Location: HIGH COURT (BY SRI. M. V. SESHACHALA, SR. ADV. FOR
OF KARNATAKA SRI. ARAVIND V CHAVAN.,ADV.)
THIS APPEAL IS FILED UNDER SEC.260-A OF THE
INCOME TAX ACT, 1961, PRAYING TO I. FORMULATE THE
SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE.II. ALLOW
THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE
INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.
580/BANG/2022 DATED 30.11.2022 FOR ASSESSMENT YEAR
2013-2014 ANNEXURE- C AND CONFIRM THE ORDER OF THE
APPELLATE COMMISSIONER CONFIRMING THE ORDER
PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX,
CENTRAL CIRCLE-2(2), BENGALURU.
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NC: 2023:KHC:43893-DB
ITA No. 225 of 2023
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS
DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the Revenue is directed against
judgment and order dated 30.11.2022 in ITA
No.580/Bang/2022 passed by the ITAT1, Bengaluru.
2. Heard Shri M. Dilip, learned Standing
Counsel for the Revenue and Shri Sheshachala,
learned Senior Advocate for the assessee.
3. Briefly stated the facts of the case are, the
petitioner filed its return for assessment year
2013-14. The assessing authority made an addition
of Rs.4,23,55,400/- holding that the assessee had
received a sum of Rs.8,59,55,400/- as project
management fees from M/s Scania Commercial
Vehicles Pvt. Ltd. ('Scania' for short), but declared
only Rs.4,36,00,000/- in its return of income. The
Commissioner (Appeals) has confirmed the order
passed by the Assessing Officer. On further appeal,
Income Tax Appellate Tribunal
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the ITAT by the impugned order has allowed the
appeal. Feeling aggrieved, the Revenue is before
this Court.
4. Shri Dilip submitted that it is not in dispute
that for assessment year 2013-14, assessee has
received Rs.8.59 Crores, but declared only Rs.4.36
Crores. Therefore, there is no error in the order
passed by the Assessing Officer in bringing to tax the
remaining sum of Rs.4.23 Crores.
5. In reply, Shri Sheshachala submitted that
the assessee's case falls under Accounting Standard-
9 (AS-9) on completed contract basis. The ITAT has
rightly appreciated the said Accounting Standard and
allowed the appeal. He submitted that the Revenue
had never disputed the aspect that the assessee has
declared the receipt of Rs.8.59 Crores in assessment
year 2012-13, 2014-15 and 2015-16. Placing
reliance on the decision of this Court in Pr.
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Commissioner of Income Tax Vs. Fortuna Projects2,
he submitted that in similar circumstances, this
Court has held the question of law in favour of the
assessee.
6. We have carefully considered the rival
contentions and also perused the records.
7. Though this appeal has been admitted to
consider 4 questions, learned Advocates on both
sides submitted that only the following 3 questions
arise for consideration:
1. "Whether on the facts and in the circumstances
of the case, the Tribunal's order can be said as
perverse in holding hat the project management
fee was required to be recognized over a period
of 5 years and that the same had not accrued to
the assesse during the year under consideration
without appreciating that the payments to the
assesse were on the basis of land acquired and
in case no land was acquired in a year, no
payments were to be made"?
2. Whether on the facts and in the circumstances
of the case, the Tribunal's order can be said as
perverse in holding that assesse had offered the
income in question in the later years without
appreciating that the assesse is not free to offer
the income in any year of its choice and that
ITA No.191/2018 connected with ITA No.192/2018, decided on
11.10.2022
NC: 2023:KHC:43893-DB
income has to be brought to tax in the years to
which year it relates"?
3. 'Whether on the facts and in the circumstances
of the case, the Tribunal is right in law in
holding that the services were provided by the
assesse in equal proportion in each of the year
covered by the agreement and thus failing to
appreciate that assesse has to offer income as
per accounting standards and the enabling the
acquiring of land was the major service and
services to be rendered in respect of parcel of
land was not existent"?
8. Undisputed facts of the case are, assessee
has declared receipt of Rs.8.59 Crores in assessment
year 2012-13, 2014-15 and 2015-16. The
assessment year under consideration in this appeal
is 2013-14.
9. It was urged by Shri Dilip that before
Commissioner (Appeals), the assessee has taken a
stand that AS-7 was applicable and before ITAT, it
has taken a stand that AS-9 is applicable. We may
record that in view of the undisputed fact that the
assessee has declared the receipt of Rs.8.59 Crores
for the preceding and subsequent years of the
assessment year in consideration, the issue is
NC: 2023:KHC:43893-DB
Revenue neutral. Therefore, for the reasons
recorded in Fortuna of Project's case (supra) which is
similar to the case on hand, this appeal must fail.
Hence, the following:
ORDER
i) Appeal is dismissed;
ii) Questions of law are answered in favour
of the assessee and against the
Revenue.
No costs.
Sd/-
JUDGE
Sd/-
JUDGE
PA
CT:HS
