Ita/1272/2009 Of The Commissioner Of Income Tax, Cochin v. Harrisons Malayalam Ltd., Willingdon Isl

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 2ND NOVEMBER 2009 / 11TH KARTHIKA 1931 ITA.No. 1272 of 2009() ---------------------- ITA.194/COCH/2003 of INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): APPELLANT ------------------- HARRISONS MALAYALAM LTD., WILLINGTON ISLAND, KOCHI. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 02/11/2009, ALONG WITH I.T.APPEAL No.1364 of 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.RAMAN & P.R.RAMACHANDRA MENON ------------------------------- I.T.Appeal Nos. 1272 & 1364 of 2009------------------------------- Dated this the 2[nd] November, 2009J U D G M E N T Raman, J. In I.T.Appeal No.1272/2009, the assessee is acompany engaged in the production and cultivation of tea, rubberetc. Return of income for the assessment year 1998-99.Subsequently, the assessment was completed under Section 143(3) of the Income Tax Act determining the total income atRs.11,82,46,750/=. While so, the Assessing Officer disallowedthe claim made by the assessee towards fee to RPG EnterprisesLtd., Mumbai, under Section 37(1) of the Income Tax Act.Accordingly, the Commissioner of Income Tax by order underSection 263 of the Income Tax Act, held that the expenditureclaimed by the assessee towards licence fee is not laid out to bewholly and exclusively for the purpose of business and hence not I.T.Appeal Nos.1272 & 1364 of 2009 allowable under Section 37(1) of the Income Tax Act. Theassessment was accordingly set aside, with a direction to redothe assessment according to the directions contained therein.Subsequently, the assessment was completed under Section 143(3) of the Income Tax Act, fixing the total income atRs.12,28,38,760/=, disallowing the licence fee paid by theassessee towards RPG Enterprises Ltd. 2. In I.T.No. 1364 of 2009 also, the assessment year is 2000-01, and the claim made by the assessee towardslicence fee was disallowed on the self-same ground. Ultimately,the matter went before the Tribunal. The Tribunal held that the llicence fee paid by the assessee to RPG Enterprises Ltd.,Mumbai, is incurred wholly and exclusively for the purpose ofbusiness and business expenditure is allowable under Section 37(1) of the Income Tax Act. The finding of the Tribunal is basedon the assessment of fact as to whether the licence fee paid isexclusively for the business purpose of the assessee, andtherefore, we find that this is only a question of fact and do not raise any substantial question of law. Accordingly, the appealsare dismissed. P.R.RAMAN, JUDGE P.R.RAMACHANDRA MENON, JUDGE. nj.