Case Law Details
PCIT Vs Agnus Holdings Pvt Ltd (Karnataka High Court)
In the case of PCIT vs. Agnus Holdings Pvt Ltd, the Karnataka High Court dismissed an appeal filed by the Revenue under Section 260-A of the Income Tax Act, 1961, concerning the assessment year 2009-10. The appeal challenged the order of the Income Tax Appellate Tribunal (ITAT), Bengaluru, which had ruled in favor of Agnus Holdings by deleting the disallowance of short-term capital loss. The main contention of the Revenue was whether the Tribunal was correct in setting aside the disallowance made by the assessing officer under Section 14A and disallowing the short-term capital loss claimed by the assessee.
However, the Revenue chose not to press the question related to the disallowance under Section 14A. The remaining issue, concerning the short-term capital loss, was argued by the assessee’s counsel, who cited a previous Karnataka High Court ruling that covered the same issue in ITA No.379/2017. In that case, the court dismissed the Revenue’s appeal due to the monetary limits specified in a circular dated 08.08.2019, which restricts the filing of appeals by the Revenue based on the monetary value involved. The High Court noted that since the earlier ruling had reached finality, the same principle applied in the present case.
Consequently, the court upheld the Tribunal’s decision, affirming the deletion of the disallowed short-term capital loss and dismissing the appeal. The High Court ruled that the Tribunal had correctly relied on the prior order and that the case was rightly settled in favor of the assessee. The appeal was dismissed as lacking merit.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This appeal is filed by the Revenue under Section 260-A of Income Tax Act, 1961 challenging the order of the ITAT, Bengaluru passed in ITA No.529/Bang/2014 dated 13.10.2016 relating to the Assessment Year 2009-10, raising the following substantial questions of law:
1 “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance made under section 14A of the Act by following its earlier order in case of assessee itself which has not reached finality and even when the assessing authority rightly made said disallowance in compliance with Rule 8D of I.T. Rules read with section 14A of the Act?”
2. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance of shore terms capital loss made by assessing authority by following its earlier order which has not reached finality and when assessing authority rightly rejected the said claim as the assessee had failed to explain correctness of said claim and failed to substantiate with any materials?”
2. Learned counsel for the revenue submits that he is not pressing substantial question of law No.1.
3. Learned counsel for the respondent/assessee would submit that the substantial question of law No.2 is squarely covered by the judgment of this Court in ITA No.379/2017 (DD 07.07.2021). Learned counsel for the revenue does not dispute the same.
4. In view of the aforesaid, substantial question of law No.2 is answered in the affirmative in favour of the assessee and against the revenue, placing reliance on the decision of Co-ordinate Bench of this Court stated (supra) wherein, it has been held thus:
“The aforesaid order has been upheld by the tribunal. It is not in dispute that if against the order passed in the case of assessee for the Assessment Year 2007-08 an appeal was preferred before this court, which was dismissed in view of the bar contained in the Circular dated 08.08.2019 pertaining to monitory limit. Thus, the order passed by the tribunal has attained finality. Therefore, in the fact situation of the case, the tribunal rightly affirmed the order of the Commissioner of Income Tax (Appeals) in setting aside the disallowance of short term capital loss. Therefore, the substantial question of law No.2 is answered in affirmative and against the revenue.”
5. In the result we do not find any merit in the appeal, the same fails and is hereby dismissed.
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