Ita/11/2018 Of M/S.kings Infra Ventures Ltd v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 17 DAY OF NOVEMBER 2021 / 26TH KARTHIKA,1943 ITA NO. 11 OF 2018 ITA 25/COH/2017(2011-12) OF I.T.A.TRIBUNAL,COCHIN BENCH,KOCHI, ERNAKULAM APPELLANT/S: M/S.KINGS INFRA VENTURES LTDA-1,ATRIA APARTMENT, PERUMANOOR ROAD,THEVARA, KOCHI 682 015(PAN AACCV 3411D) BY ADVS.JOSEPH MARKOSE (SR.)V.ABRAHAM MARKOSISAAC THOMASP.G.CHANDAPILLAI ABRAHAMSHARAD JOSEPH KODANTHARAABRAHAM JOSEPH MARKOS RESPONDENT/S: THE COMMISSIONER OF INCOME TAX,C R BUILDINGS, I S PRESS ROAD,ERNAKULAM, KOCHI 682 018BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX OTHER PRESENT: SR ADV P.K.R. MENON SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON17.11.2021, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: ITA NO. 11 OF 2018 -2- J U D G M E N T(Dated this the 17[th] day of November 2021) Basant Balaji J., The appellant challenges the order in I.T.A.No.25/Coch/2017 dated 14.7.2017 of the Income Tax AppellateTribunal, Cochin Bench, Kochi. 2. The appellant was engaged in the business of aqua farm culture and sale of its proceeds. Until 2007, thecompany functioned in the name of 'M/s.Victory Aqua FarmLimited' and later changed its name to 'M/s.Kings InfraVentures Limited' and ventured into construction business.The appellant filed its return of income for the assessmentyears 2011-12, disclosing nil income. The appellant, whilefiling the return of income, made claim for Rs.1,52,76,459/- ITA NO. 11 OF 2018 -3- (carried forward loss), which included depreciation loss of Rs.1,88,52,496/- (pertaining to the assessment years 1996-97 to 2009-10) and loss amounting to Rs.35,85,037/- (pertaining to the assessment years 1996-97 and 1997-98). The total loss of Rs.1,52,76,459/- was adjusted against the taxable income of Rs.35,85,037/- for the assessment year 2011-12, wherebythe taxable income came to be nil. The assessment authority disallowed the set off of loss and assessed the same as tax forthe assessment year 2011-12. Thereafter, the assessment wascompleted under Section 143(3) of the Income Tax Act. 3. The appellant filed appeal before the Commissioner of Income Tax Appeals. 4. The first appellate authority, after a detailed discussion of the relevant provisions, as well as the ITA NO. 11 OF 2018 -4- adjustment of various Rules and Tribunals, allowed theAppeal in part. 5. As per the said order, the first appellate authority, allowed the amount of unabsorbed depreciation broughtforward from the assessment years 1996-97 and 1997-98 wereallowed to be set off against the taxable income for theassessment years 2010-11, 2011-12 and the following theyears. The first appellate authority made a further direction tothe Assessing Officer to take necessary steps to reopen theassessment proceedings for the assessment years impactedand if the assessment or re-assessment for the preceding assessment years 2010-11 serves to be disallowed anyconcurrent claim of the unabsorbed depreciation lossesrelating to assessment years 1997-98 as above, necessary ITA NO. 11 OF 2018 -5- adjustment will need to be made to disallow any suchequivalent value in the impugned assessment year 2011-12and succeeding assessment years as applicable. 6. Aggrieved by the order of first appellate authority in assessment years 2010-11 serves to be disallowed anyconcurrent claim of the unabsorbed depreciation lossesrelating to assessment years 1997-98 as above, necessary ITA NO. 11 OF 2018 -5- adjustment will need to be made to disallow any suchequivalent value in the impugned assessment year 2011-12and succeeding assessment years as applicable. 6. Aggrieved by the order of first appellate authority in respect of reopening of assessment years for the assessmentyears 2010-11 and succeeding years 2012-13 onwards, theappellant filed second appeal before in Income Tax AppellateTribunal, Cochin Bench. The main ground raised by theappellant before the second appellate authority was that thegrounds raised before the first appellate Authority was inrespect of dis-allowance of unabsorbed depreciation for theassessment year 2011-12 and since the first appellate authorityallowed the same, it exceeded its jurisdiction to further directthe Assessing officer to reopen the assessment proceedings ITA NO. 11 OF 2018 -6- for the assessment year 2010-11 and 2012-13 onwards, more so when there was no appeal by the revenue. The Tribunalcame to the definite conclusion that it is vested with thejurisdiction only to examine the issue concerning the year2011-12 and since the first appellate authority has allowed setoff, the Tribunal need not go into other directions made bythe first appellate authority in respect of reopening of theassessment for the assessment years 2010-11 and 2012-13onwards. The appellant herein challenges the order of theIncome Tax Appellate Tribunal on various grounds. The appellant raises the following substantial questions of laws tobe considered by this court: i. “Whether on the facts and circumstances of thecase the Appellate Tribunal was justified insustaining the order of the Appellate ITA NO. 11 OF 2018 -7- Commissioner, in toto? ii. Ought not the Appellate Tribunal to have held that the assets were 'kept ready for use' and therefore,there was no occasion for the 1[st] appellateauthority to take a different stand?there was no occasion for the 1[st] appellateauthority to take a different stand? iii.Whether on the facts and circumstances of the case the Appellate Tribunal was justified in holding thatthe first appellate authority did not exceed thejurisdiction when it directed reopening ofassessment for different years?the first appellate authority did not exceed thejurisdiction when it directed reopening ofassessment for different years? iv. Ought not the appellate Tribunal to have held thatthe 1[st] appellate authority must confine itself to theyear in which the appeal is filed by the appellant,more particularly, when the appellate tribunal inAnnexure-E order categorically stated that it willconfine the consideration of the issues for theassessment year 2011-12 alone?the 1[st] appellate authority must confine itself to theyear in which the appeal is filed by the appellant,more particularly, when the appellate tribunal inAnnexure-E order categorically stated that it willconfine the consideration of the issues for theassessment year 2011-12 alone? v. Whether on the facts and circumstances of the casethe appellate tribunal was correct in confirming thethe appellate tribunal was correct in confirming the ITA NO. 11 OF 2018 -8- reopening of assessments for different assessment years, in the appeal filed by the assessee for theassessment year 2011-12, in the absence of anychallenge from the Department, in respect of theyears in which reassessment was directed to bemade by the 1[st] appellate authority?Whether thefinding of fact by the Appellate Tribunal erroneousand perverse?” 7. Heard the senior counsel Sri.Joseph Markose for the appellant and the senior counsel Shri P K R Menon for the respondent. 8. The senior counsel for the appellant argued that Income Tax Tribunal erred in interfering with the findings of the First Income Appellate Authority to the extent it directs ITA NO. 11 OF 2018 -8- reopening of assessments for different assessment years, in the appeal filed by the assessee for theassessment year 2011-12, in the absence of anychallenge from the Department, in respect of theyears in which reassessment was directed to bemade by the 1[st] appellate authority?Whether thefinding of fact by the Appellate Tribunal erroneousand perverse?” 7. Heard the senior counsel Sri.Joseph Markose for the appellant and the senior counsel Shri P K R Menon for the respondent. 8. The senior counsel for the appellant argued that Income Tax Tribunal erred in interfering with the findings of the First Income Appellate Authority to the extent it directs the Assessing Officer to take necessary action for reopening ITA NO. 11 OF 2018 -9- of the assessment for the years 2010-11 and 2012-13 onwards, as it was done by the 1[st] appellate authority withoutjurisdiction in an appeal filed by the assessee challenging thedisallowing of unabsorbed depreciation. for the year 2011-12. He further submitted that even though his appeal was partlyallowed by the first appellate authority granting relief for theassessment years 2011-12, the further direction made by theFirst appellate authority to the Assessing Officer, isunwarranted. 9. The senior counsel argued that since the appeal before the Tribunal was in respect of second part of the order of thefirst appellate Authority directing the Assessing Officer toreopen the assessment, the Tribunal ought to have interferedand allowed the appeal setting aside the direction made by the ITA NO. 11 OF 2018 -10- first appellant authority to the Assessing Officer. 10. On the other hand, the senior counsel, Shri P K R Menon submitted that the Tribunal has properly consideredthe appeal filed by the assessee and the assessee was givenliberty to challenge the order of the Assessing Officer whenremedial measures are taken by the Assessing Officer for therespective years 2010-11 and the assessment years 2012-13onwards and its premature for him to argue that interferenceis unwarranted at this stage. The remedy of the assessee is notforeclosed by the order of the Tribunal and hence, it does notwarrant any interference with the order of the Tribunal. 11. We have anxiously considered the rival submissionsmade at the Bar. On going through Annexure - D, it is evidentthat the appellant challenges the order of the first appellant ITA NO. 11 OF 2018 -11- authority on the ground that the first appellate authorityexceeded its jurisdiction which was limited to the assessmentyear 2011-12 and by giving direction or re-opening theassessment for the years 2010-11 and 2012-13 onwards, waswithout jurisdiction. On going through the order of theTribunal, we have noted that the grounds raised by theappellant mentioned above was taken note of, but the saidcontention was not answered by the Tribunal for the reasonthat the issue before the Tribunal was only in respect of theassessment years 2011-12. The Tribunal did not go into thegrounds raised by the appellant in respect of the directiongiven by the 1[st] appellate authority to the Assessing Officer tore-open the assessment for the years 2010-11 and 2012-13onwards. According to us, the Tribunal ought to have ITA NO. 11 OF 2018 -12- answered the said question, but failed to do so. The learned senior counsel Shri P K R Menon appearing for the Revenuealso agrees that the Tribunal has not properly considered allof the relevant questions raised by assessee. He, however,suggests persuasively that this court ought not examine allthe aspects afresh. We are in total agreement with him, afterreading the order of the Tribunal and we are of the view thatthe matter requires re-consideration by the Tribunal in respectof the issue regarding the direction given by the 1[st] appellantauthority to the Assessing officer to re-open the assessmentfor the years 2010-11 and 2012-13 onwards. The questionsare answered accordingly. ITA NO. 11 OF 2018 -12- answered the said question, but failed to do so. The learned senior counsel Shri P K R Menon appearing for the Revenuealso agrees that the Tribunal has not properly considered allof the relevant questions raised by assessee. He, however,suggests persuasively that this court ought not examine allthe aspects afresh. We are in total agreement with him, afterreading the order of the Tribunal and we are of the view thatthe matter requires re-consideration by the Tribunal in respectof the issue regarding the direction given by the 1[st] appellantauthority to the Assessing officer to re-open the assessmentfor the years 2010-11 and 2012-13 onwards. The questionsare answered accordingly. In the result, this Income Tax Appeal is allowed, settingaside the order of the Tribunal dated 14.7.2017 and remitting ITA NO. 11 OF 2018 -13- back for fresh consideration, in accordance with law, after giving both the parties opportunity of hearing, at any rate,within a period of three months from the date of receipt of acertified copy of this judgment. Needless to state, that we are not gone into the merits of the contentions raised by either of the parties. The Tribunal is free to look into the issue afresh and pass fresh final orders asdirected above. SD S.V.BHATTI, JUDGE SD BASANT BALAJI, JUDGE