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2010 (7) TMI 949 - KARNATAKA HIGH COURTWhether the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 is attracted to the facts of this case? Held that:- The transactions referred to are neither sham or unreal. Though we could see that these three companies are floated with the intention of avoiding payment of tax, as long as the said act is within the frame work of law and is not a sham transaction, the benefit of the law or the loopholes in the law would enure to the benefit of the assessee. After seeing how this loophole has been exploited within the four corners of law, the Parliament has promptly now amended the law plugging the loophole. Therefore, by any judicial interpretation we cannot read it into the section which was not intended by the Parliament at the time of enacting this provision. Therefore, the order passed by the Tribunal is in consonance with the law of the land. The substantial question of law raised in this appeal is answered against the Revenue and in favour of the assessee. In so far as the assessment year 1991-92 is concerned, the Tribunal without proper application of mind has held the said assessment order is barred by limitation. It is not in dispute that there was an order for deferment under section 12(6) of the Act which saved limitation and, therefore, that portion of the order of the Tribunal is liable to be set aside and in favour of the Revenue. As the Tribunal has remanded the matter back to the assessing officer for reassessment after carefully scrutinizing the factual aspects of the case, in doing so the assessing officer shall not take into consideration the third proviso to section 5(3)(a) of the Act again and is at liberty to pass appropriate orders excluding the said portion.
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