1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 10TH DAY OF SEPTEMBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.658 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX MANGALORE. 2. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1, UDUPI. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.) AND: M/S. MANIPAL FINANCE CORPORATION LTD., MANIPAL HOUSE, MANIPAL-576104. ... RESPONDENT (RESPONDENT SERVED) --- THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 02-08-2013 PASSED IN ITA NO.1369/BANG/2012, FOR ASSESSMENT YEAR 2009-10, PRAYING TO: I. FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. 2 II. SET ASIDE COMMON APPELLATE ORDER DATED 02/08/2013 PASSED BY ITAT, B BENCH, BANGALORE IN APPEAL PROCEEDINGS ITA NO.1369/BANG/2012, AS SOUGHT FOR IN THIS APPEAL. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT Mr.E.I.Sanmathi, learned counsel for revenue. None for respondent though served. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) has been preferred by revenue which was admitted by Bench of this Court vide order dated 31.01.2014 to consider following substantial questions of law: 1. Whether on facts and in circumstances of case, Tribunal is justified in law in allowing principal portion of deposits amounting to Rs.5,26,895/-, principal portion of debentures amounting to Rs.22,77,700/- 3 and principal portion of debts amounting to Rs.3,20,57,414/- as capital receipts?. 1(a) Whether, on facts and in circumstances of case, Tribunal is right in law in not appreciating fact that principal portion of deposits, debentures and debts foregone by depositors/customers is similar to forfeiture of deposits and attains character of revenue receipts, and hence it becomes assessee s income as held by Hon ble Supreme Court in case of CIT vs. Lakshmi Vilas Bank Ltd. (220 ITR 350)?. 1(b) Whether on facts and in circumstances of case, Tribunal is justified in law in not appreciating fact that though amount is not taxable in year of receipt, amount changes its character when amount becomes assessee s own money because of limitation or any other statutory or contractual rights as held by Hon ble Supreme Court in case of CIT vs. T.V. Sunderam Iyengar & Sons Ltd. (222 ITR 344). 4 1(c) Whether on facts and in circumstances of case, Tribunal is correct in not taking cognizance of provisions of sec.28(iv) of IT Act and failing to note that since assessee is carrying on finance business principal portion forgone by depositors is benefit or perquisite arising from exercise of business? 1(d) Whether on facts and in circumstances of case, Tribunal is correct in not considering decision of Hon ble ITAT, Bangalore Bench, in case of Manipal Sowbhagya Nidhi Ltd for Assessment Year 2003-04, who in their order dt. 07-11-2008 in ITA No.379/BANG/08 have upheld assessment of principal portion of deposits foregone by depositors?. 3. When matter was taken up today, learned counsel for revenue submitted that substantial questions of law involved in this appeal have already been answered by Bench of this Court vide judgment 5 dated 07.10.2014 passed in ITA Nos.795/2008 and 794/2008 and against aforesaid decision, revenue has preferred appeal before Supreme Court which is pending. 4. In view of aforesaid submission and for reasons assigned in judgment dated 07.10.2014 passed in ITA Nos.795/2008 and 794/2008, substantial questions of law framed by Bench of this Court in this appeal are answered against revenue and in favour of assessee. In result, appeal fails and is dismissed. Sd/- JUDGE Sd/- JUDGE RV Commissioner of Income-tax, Mangalore / Deputy Commissioner of Income-tax Circle-1, Udupi v. Manipal Finance Corporation Ltd