Ita/1126/2009 Of The Commissioner Of Income Tax v. Island Hotel Maharaja Pvt.ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU MONDAY, THE 5TH DAY OF SEPTEMBER 2016/14TH BHADRA, 1938 ITA.No. 1126 of 2009 ( ) ------------------------- AGAINST THE ORDER/JUDGMENT IN ITA 159(COCH)/2005 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 11-10-2007 APPELLANT(S)/APPELLANT: ------------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): -------------- ISLAND HOTEL MAHARAJ PVT.LTD., WILLINGDON ISLAND,COCHIN-682 003. R,R BY ADV. SRI.V.P.NARAYANAN R,R BY ADV. SRI.T.M.SREEDHARAN R,R BY ADV. SMT.C.K.SHERIN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX : 2 : PETITIONER'S ANNEXURES: ANNEXURE A:COPY OF AGREEMENT DATED 10.03.1994 BETWEEN'MAHARAJ' AND 'INDUS' (OBEROI GROUP).'MAHARAJ' AND 'INDUS' (OBEROI GROUP). ANNEXURE B:COPY OF ORDER U/S.143(3) DATED 24.01.2001 FOR THEASST. YEAR 1998-99.ASST. YEAR 1998-99.ANNEXURE C:COPY OF ORDER DT. 15.10.2004 OF THE COMMISSIONEROF INCOME TAX (APPEALS).OF INCOME TAX (APPEALS).ANNEXURE D:COPY OF ORDER DATED 11.10.2007 OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH IN ITANO.159/COCH/2005. APPELLATE TRIBUNAL, COCHIN BENCH IN ITANO.159/COCH/2005. RESPONDENTS' ANNEXURES:NIL //TRUE COPY// P.A. TO JUDGE. ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ. ------------------------------------------- I.T. Appeal No. 1126 of 2009 ------------------------------------------ Dated this the 5[th] day of September, 2016. JUDGMENT Antony Dominic,J. This appeal is filed by the Revenue aggrieved by the orderpassed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.No. 159 (COCH) 2005 pertaining to the assessment year 1998-1999. 2. We heard the learned Senior Counsel for the Revenue and the learned counsel appearing for the respondent assessee. 3. The questions of law framed for the consideration of this Court are the following: 1. Whether, on the facts and in the circumstances of the case, theTribunal is right in law and fact in holding that the assesseecannot be denied the benefit of carry forward of losses underSection 72 read with Section 80 of the I.T.Act as well asunabsorbed depreciation under Section 32 of the I.T. Act?Tribunal is right in law and fact in holding that the assesseecannot be denied the benefit of carry forward of losses underSection 72 read with Section 80 of the I.T.Act as well asunabsorbed depreciation under Section 32 of the I.T. Act? 2. Whether, on the facts and in the circumstances of the case andalso in view of the fact that the assessee did not produce booksof accounts of the Bar Hotel/business pursuant to the noticeunder Section 142(1) before the Assessing Officer or before theappellate authority the Tribunal is right in relying on thesubmissions of the assessee and in holding that there is nocessation of business?also in view of the fact that the assessee did not produce booksof accounts of the Bar Hotel/business pursuant to the noticeunder Section 142(1) before the Assessing Officer or before theappellate authority the Tribunal is right in relying on thesubmissions of the assessee and in holding that there is nocessation of business? 3. Whether on the facts and in the circumstances of the case and I.T. Appeal No. 1126/2009 in the light of the finding of the Assessing Officer that “the annuallicence fee for the Bar was to be paid by Indus” the Tribunal isright in law and fact in holding that “ it is seen that the assesseehas paid the bar licence fee” and is not the finding unsupportedby any evidence and perverse? 3. Whether on the facts and in the circumstances of the case and I.T. Appeal No. 1126/2009 in the light of the finding of the Assessing Officer that “the annuallicence fee for the Bar was to be paid by Indus” the Tribunal isright in law and fact in holding that “ it is seen that the assesseehas paid the bar licence fee” and is not the finding unsupportedby any evidence and perverse? 4. Whether, on the facts and in the circumstances of the case andfor the reason given by the Assessing Officer in the consideredorder the Tribunal is right in law and fact in interfering with theorder of the Assessing Officer and is not the order of the Tribunalunsupported by evidence and materials?”for the reason given by the Assessing Officer in the consideredorder the Tribunal is right in law and fact in interfering with theorder of the Assessing Officer and is not the order of the Tribunalunsupported by evidence and materials?” 4. The issue that is required to be answered in this case iswhether the Tribunal was justified in confirming the order passed bythe Commissioner of Income Tax (Appeals) interfering with the orderpassed by the Assessing Officer disallowing the claim of loss for theyear in question and that of brought forward losses. A reading of theassessment order itself shows that on the basis of the agreemententered into between the assessee and another company,investments were made in the assessee company and shares werealso subscribed by new persons. The Assessing Officer has alsoreferred to the fact that new Directors were also inducted into theBoard of Directors of the assessee and that the entire character of thebusiness of the assessee had undergone sea change. According tothe Assessing Officer, during the said period building was demolished and a new project was under implementation. On these facts, theAssessing Officer concluded that there was cessation of businessjustifying disallowance of the claim of loss and that of carry forwardlosses. It was this order of the Assessing Officer which was set asideby the first appellate authority and confirmed by the Tribunal. 5. Although the learned Senior Counsel for the Revenue soughtto impugn the findings of the first appellate authority and theTribunal, we find that the assessee, a legal entity, despite theagreement that is referred to by the Assessing Officer and the inflowof external funds and changes in the share pattern and Board ofDirectors, continued to exist as a legal entity. It is also the admittedfactual position that during the relevant year, FL-3 licence issuedunder the Foreign Liquor Rules was possessed by the assessee.Therefore, despite the renovation or reconstruction that was going onand the changes that have occurred in the structure of the company, itcannot be said that there was cessation of business disentitling theassessee for the benefits in question. Therefore, we do not find anyreason to disagree with the order passed by the first appellateauthority as confirmed by the Tribunal. According to us, in the above I.T. Appeal No. 1126/2009 background, the order of the Tribunal does not give rise to anyquestions of law to be considered by this Court in this appeal filedunder Section 260A of the Income Tax Act. Appeal fails and it isaccordingly dismissed. ANTONY DOMINIC, JUDGE. DAMA SESHADRI NAIDU, JUDGE. Rv