Ita/1136/2009 Of The Commissioner Of Income Tax,Cochin v. M/S.kerala Agro Machinery Corporation Lt

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 24TH SEPTEMBER 2009 / 2ND ASWINA 1931 ITA.No. 1136 of 2009() ---------------------- ITA.682/COCH/2006 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- KERALA AGRO MACHINERY CORPORATION LTD. THANI, ALUVA. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 24/09/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &V.K. MOHANAN, JJ. -------------------------------------------- -------------------------------------------- Dated this the 24th day of September, 2009 JUDGMENT Ramachandran Nair, J. Respondent is a Government of Kerala undertaking. Theassessment involved is for the year 2001-02. Wage revision was duefrom 1.7.2000 onwards. Even though there was settlement in theprevious year itself about increase in wage, the actual settlement andpayment were made in the subsequent years. However, since wagerevision was payable from 1.7.2000 onwards, and the same will involveliability for 9 out of 12 months in the previous year relevant for theassessment year 2001-02, the assessee reasonably worked out theadditional wages payable to the workers and claimed deduction on thesame on accrual basis. The assessing officer however rejected theclaim stating that actual liability arises only when settlement is signed.However, in first appeal, the first appellate authority held that liabilitywas reasonably ascertained which was in fact paid in the subsequentyears. Therefore he allowed the claim. It is against this order confirmed by the Tribunal, that the department has filed this appeal.We do not find any merit in the department appeal as the liability wasfixed by the company on a rational basis and the employees were infact eligible for wage revision for 9 months out of the previous yearrelevant for the assessment year. Consequently appeal is dismissed. (C.N.RAMACHANDRAN NAIR)Judge. (V.K. MOHANAN) Judge. kk