Commissioner Of Income Tax_ v. Parry Agro Industries Ltd._ [(2006) 206 Ctr

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN TUESDAY, THE 7TH AUGUST 2007 / 16TH SRAVANA 1929 ITA.No. 84 of 2000 -------------------- ORDER DATED 29.2.2000 IN ITA.180/COCH/1996 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN .................... APPELLANT/REVENUE: --------------------------------- THE COMMISSIONER OF INCOME-TAX,COCHIN. BY STANDING COUNSEL, GOVT. OF INDIA (TAXES) SRI.P.K.R.MENON (SR.) & SRI.GEORGE K. GEORGE RESPONDENT/ASSESSEE: -------------------------------------- M/S.PARRY AGRO INDUSTRIES LTD.,WELLINGDON ISLAND, COCHIN. BY ADV. SRI.ANIL D. NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/08/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ------------------------------------------ I.T.Appeal No.84 of 2000 ------------------------------------------ Dated, this the 7[th] day of August, 2007 JUDGMENT H.L.Dattu, C.J. This appeal arises out of an order passed by the Income Tax AppellateTribunal, Cochin Bench, Cochin in I.T.A.No.180 of 1996 for the assessmentyear 1992-93, dated 29[th] February, 2000. (2) The assessee has raised the following questions of law forconsideration and decision by this Court. They are as under: “1. A) Whether, on the facts and in thecircumstances of the case the Tribunal is right in law inholding that for arriving at the written down value of theassets in the tea business, depreciation to the extent of 40%only was to be adjusted as the depreciation actually allowed? B) Whether, the Tribunal is factually right inupholding the contention that 'depreciation actually allowedwas only 40%' and is not the finding wrong legally andfactually? 2.A) Whether, on the facts and in thecircumstances of the case, the Tribunal is right in law inholding that the profit derived from export is to be computedfor the purpose of the relief u/s.80HHC in accordance withclause (a) of subsection (3) of Assam tea without taking intoaccount the turnover of tea from other estates, provided thebusiness there is exclusively of export of tea? B) Whether, on the facts and in thecircumstances of the case and on an interpretation of section80-HHC of the Income-tax Act, should not the Tribunal havetaken the total turnover of the entire business including theAssam Tea Estate since as regards the tea business ofAssam Tea Estate is concerned, the business as a whole inrespect of all the estates has to be taken together and is notthe direction to the Assessing Authority wrong andunwarranted? (3) In so far as the first question of law is concerned, the same iscovered against the assessee in view of the decision of this Court in the case of I.T.A.No.84/2000 Commissioner of Income Tax v. Parry Agro Industries Ltd. [(2006) 206 CTR (Ker.) 36]. In the said decision the Court has observed as under: “14. We may now extract question Nos.4(a) and (b). “4(a) Whether, on the facts and in thecircumstances of the case, the Tribunal is right inlaw in holding that for arriving at the WDV of theassets in the tea business, depreciation to theextent of 40 per cent only was to be adjusted asthe depreciation actually allowed? 4(b) Whether, the Tribunal is factuallyright in upholding the contention that'depreciation actually allowed was only 40 percent' and is not the finding wrong legally andfactually?” I.T.A.No.84/2000 Commissioner of Income Tax v. Parry Agro Industries Ltd. [(2006) 206 CTR (Ker.) 36]. In the said decision the Court has observed as under: “14. We may now extract question Nos.4(a) and (b). “4(a) Whether, on the facts and in thecircumstances of the case, the Tribunal is right inlaw in holding that for arriving at the WDV of theassets in the tea business, depreciation to theextent of 40 per cent only was to be adjusted asthe depreciation actually allowed? 4(b) Whether, the Tribunal is factuallyright in upholding the contention that'depreciation actually allowed was only 40 percent' and is not the finding wrong legally andfactually?” In view of the decision of this Court in C.W.S.(India) Ltd.'s case(supra), these questions have to be answered in favour of theRevenue. This Court in C.W.S. (India) Ltd.'s case (supra) heldthat after computing the total income, the same has to bebifurcated in the ratio of 60 : 40 and the total income wouldnecessarily mean the net income and not gross income. Theincome from tea estate is computed applying ss. 28 to 43C,and when computing the income, depreciation of 100 per centis allowed under s.32 though for the purpose of charging ofincome under IT Act, r.8 is applied and the income socomputed is apportioned. The depreciation actually allowedagainst the assessee was not 40 per cent, but 100 per centwhich is to be considered for the purpose of WDV. Thesequestions are, therefore, answered in the negative in favour ofthe Revenue.” (4) In view of the above decision of this Court, the first question of lawframed by the assessee is answered in favour of the Revenue and against theassessee. (5) In so far as the second question of law is concerned, the same isalso no more debatable in view of the orders passed by this Court in theaforesaid decision. In the said decision the Court has observed at paragraph13 as under: “13. We find in the facts and circumstances of the casethe Tribunal is right in holding that the profit derived from exportis to be computed for the purpose of the relief under s.80HHCin accordance with cl. (a) of sub-s.(3) of Assam tea withouttaking into account the turnover of tea from other estates.Questions 2 and 3 are already covered by the judgment of thisCourt in I.T.Appeal No.103 of 1999 and I.T.Appeal No.115 of1999 in favour of the Revenue in which the assessee itself wasthe party. We, therefore, follow those decisions and answerthese two questions in favour of the Revenue.” (6) In view of the law declared by this Court, the second question of law is also answered in favour of the Revenue and against the assessee. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE vns (K.T.SANKARAN) JUDGE