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IN THE HIGH COURT OF KARNATAKA
B.M. Shyam Prasad, J.
United Spirits Limited – Petitioner
Versus
Assistant Commissioner of Income Tax – Respondent
Writ Petition No. 13953, 13934, 13946 of 2020
Decided On : 17-08-2023
| Table of Content |
|---|
| 1. overview of petitioner and assessment years (Para 1 , 2 , 3) |
| 2. cit appeals outcomes and itat's directions (Para 4 , 5 , 6) |
| 3. petitioner's refund applications and computations (Para 7 , 8 , 9) |
| 4. substituted provisions of section 153 of the it act (Para 10 , 11 , 12 , 13 , 14) |
| 5. court's inquiry on itat orders and timeliness of assessment (Para 15 , 16 , 17) |
| 6. differentiating full assessments versus limited reconsiderations (Para 18 , 19 , 20) |
| 7. legislative intent and amendments regarding assessment timelines (Para 21 , 22 , 23 , 24) |
| 8. panel's order on refund claims and considerations (Para 25 , 26 , 27 , 28) |
ORDER :
1. The petitioner has impugned the notices dated 05.11.2020 and 06.11.2020 issued by the first respondent to extend an opportunity of hearing after the Income Tax Appellate Tribunal's (ITAT) common Order dated 31.03.2015 in (a) ITA No. 1277/Bang/2010, (b) ITA No. 424 & 605 (Bang) /2013 and (c) ITA No. 652 & 653(Bang) 2013. The petitioner further seeks directions to the respondents to refund certain amounts with applicable interest corresponding to the three assessment years.
2. A brief conspectus of facts leading to these impugned notices is stated thus. The petitioner is a public limited company, and the petitioner has filed its return on income with the claims for refund for the corresponding assessment years as follows:
| Assessment Years | 2007-08 In Rs. | 2008-09 In Rs | 2009-10 In Rs |
| Declared Income | 346,41,78,725/- | 525,86,44,940/- | 496,63,97,797/- |
| Refund Claimed | 2,74,12,043/- | 21,14,04,480/- | 21,82,43,000/- |
The Assessing Officer (AO), after a scrutiny assessment under Section 143(3) of the INCOME TAX ACT , 1961 (for short, the 'IT Act'), has passed respective Assessment orders (1) dated 31.12.2009 (for the Assessment Year 2007- 08), 29.12.2010 (for the Assessment Year 2008-09) and 30.12.2011 (for the Assessment Year 2009-10) making various dis-allowances.
(1) A copy of the respective order is produced as Annexure - A in each of the petitions.
3. The AO in the aforesaid Assessment orders has disallowed the following for the respective Assessment Years.
| Depreciation on building (Section 32 of the IT Act) | Rs. 2,45,116/- |
| Section 14A of the IT Act | Rs. 27,64,15,000/- |
| Bad Debts and Bad Advances written off | Rs. 1,48,85,308/- |
| Non consideration of brought forward loss | Rs. 16,13,58,199/- |
| Taxable Income | Rs. 391,70,82,437/- |
| Balance tax payable (including interest) | Rs. 22,70,56,315/- |
(ii) For the Assessment Year 2008-09
| Disallowance of Foreign Exchange Fluctuation Loss | Rs. 5,68,45,363/- |
| Section 14A of the IT Act | Rs. 41,20,34,568/- |
| Bad Debts and Bad Advances written off | Rs. 95,39,284/- |
| Disallowance of amalgamation of expenses | Rs. 1,69,59,640/- |
| Taxable Income | Rs. 575,40,27,792/- |
| Balance tax payable (including interest) | Rs. 7,53,16,766/- |
(iii) For the Assessment Year 2009-10
| Section 14A of the IT Act | Rs. 53,53,60,238/- |
| Bad Debts written off | Rs. 16,43,981/- |
| Taxable Income (R/O) | Rs. 550,34,02,020/- |
| Balance tax payable (including interest) | Rs. 9,89,96,390/- |
4. The petitioner, being aggrieved by the aforementioned Assessment Orders, has filed appeals before the Commissioner of Income Tax (Appeals) (for short, 'the CIT (Appeals)') challenging the dis-allowances by the A.O. The CIT (Appeals) by its order dated 06.10.2010 has dismissed the appeal for the AY 2007-08 (against the order dated 31.12.2009), and the CIT (Appeals) by its order dated 18.02.2013 has partly allowed the appeal for the AY 2008-09 (against order dated 29.12.2010) deleting the disallowance with respect to foreign exchange fluctuation loss while upholding the disallowance under Section 14A of the IT Act and disallowance of bad debts/advances written off. Similarly, the CIT
Timelines for income tax assessments are strictly regulated; actions exceeding those timelines are impermissible, reinforcing that expired timelines hinder subsequent assessments.
Tax authorities must adhere to statutory time limits when passing orders; failure results in entitlement to refunds and interest for taxpayers.
The main legal point established in the judgment is the interpretation and applicability of the time limits prescribed under Section 153(2A) and Section 153(3) of the Income Tax Act, 1961 in the cont....
The assessment order was invalid as it was issued beyond the limitation period prescribed under Section 153 of the Income Tax Act, necessitating adherence to statutory timelines.
Taxation - Liability to pay additional interest - Interest u/s 244A(1A) would not accrue in cases of fresh assessment or reassessment; use of words ‘wholly or partly’ therein would again indicate tha....
The limitation period for completing assessments following a Tribunal's order is governed by Section 153(2A), mandating a one-year limit from the end of the financial year of the Tribunal's decision.
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