Ita/196/2011 Of The Commissioner Of Income Tax-I, Cochin v. M/S.apollo Tyres Ltd., Shanmugham Road

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON& THE HONOURABLE MR.JUSTICE N.ANIL KUMAR THURSDAY ,THE 14TH DAY OF MARCH 2019 / 23RD PHALGUNA,1940 ITA.No. 196 of 2011 AGAINST THE ORDER/JUDGMENT IN ITA 111/2004 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 06-07-2011 APPELLANT/S: THE COMMISSIONER OF INCOME TAX-I, COCHIN BY ADVS.SRI.JOSE JOSEPH, SC, FOR INCOME TAXSRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT/S: M/S.APOLLO TYRES LTD., 6[th] FLOOR,CHERUPUSHPAM BUILDING, SHANMUGHAM ROAD, KOCHI 682 031BY ADVS.SRI.BINU MATHEWSRI.B.J.JOHN PRAKASHSRI.JOSEPH KODIANTHARA (SR.)SRI.MATHEWS K.UTHUPPACHANSRI.TERRY V.JAMESSRI.TOM THOMAS (KAKKUZHIYIL)SRI.V.ABRAHAM MARKOS THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. No. 196 of 2011 JUDGMENT P.R. Ramachandra Menon, J. The appeal is at the instance of theRevenue. Challenge is against 'Annexure F'order passed by the Income Tax AppellateTribunal. The assessment is in respect of the assessment year 1996-97. 2.The assessment finalised as per therelevant order was challenged before theCommissioner. Since the order passed by theCommissioner was stated as detrimental to therights of the Revenue, it was sought to bechallenged by filing an appeal by the Revenuebefore the Income Tax Appellate Tribunal.After hearing both the sides, the matter wasfinalised as per Annexure D order, which cameto be challenged before this Court inI.T.A.No.133/2010 preferred by the Revenue.The said appeal, along with connected appeal, I.T.A. No. 196 of 2011 was finalised by this Court setting aside the order passed by the Tribunal and remanding thematter for fresh consideration vide Annexure Edated 27.9.2010. Pursuant to the order of remand, the matter was considered afresh by theTribunal and the appeal preferred by theRevenue came to be dismissed as per Annexure Forder. This is sought to be challenged in thisappeal, at the instance of the Revenue. 3.Heard Mr. Christopher Abraham, the learned Standing Counsel for the Department aswell as Mr.Joseph Markose, the learned Sr.Counselfor the assessee, at length. 4.The questions suggested by the Revenue/appellant, as involving substantial question of law, are as given below: a. Whether, on the facts and in thecircumstances of the case, is not thecommission payment of M/s SunraysProperties and Investment (P) Ltd. Diversion of funds and hence income ofthe assessee and the Tribunal isjustified in interfering with theorder of the assessing Officer intreating the amount as income of theassessee? b. Whether, on the facts and in thecircumstances of the case, and for thereasons stated in the order of theAssessing Officer and in view of thefact that these investment companiesare part of the assessee company arenot the income earned by them theincome of the assesee as held by theAssessing Officer? 5.Obviously, the dispute involved is with regard to the payment of commission paidby the supplier of raw materials (to M/s.Sunrays Properties and investments privateLimited). This is branded as an instance ofdiversion of funds by the Assessing Officer andsought to be assessed by the Revenue, whereas I.T.A. No. 196 of 2011 it was contended by the assessee that the commission was paid in the course of businessand hence part of the business expense. TheTribunal answered the issue in favour of theassessee and hence the challenge. 6.Eventhough two questions have beenraisedseparately,theyareclosely interconnected. The second one is quiteincidental to the first one. It is also 5.Obviously, the dispute involved is with regard to the payment of commission paidby the supplier of raw materials (to M/s.Sunrays Properties and investments privateLimited). This is branded as an instance ofdiversion of funds by the Assessing Officer andsought to be assessed by the Revenue, whereas I.T.A. No. 196 of 2011 it was contended by the assessee that the commission was paid in the course of businessand hence part of the business expense. TheTribunal answered the issue in favour of theassessee and hence the challenge. 6.Eventhough two questions have beenraisedseparately,theyareclosely interconnected. The second one is quiteincidental to the first one. It is also evident that the Revenue has simultaneouslyassessed the assessee as well as the Companywho received the commission from the supplier(with reference to protective assessment). Assuch, there is an attempt to make unlawful gainby the Revenue, which is not correct orsustainable. 7. Similar challenge raised by the Revenue has already been considered by this Court in ITA No.973/2009, answering it against the I.T.A. No. 196 of 2011 Revenue. In the said circumstance, we findthat no separate consideration does require tobe made in this case, under that head. There is no substantial question of law. Appeal fails and it is dismissed accordingly. Sd/- P.R.RAMACHANDRA MENON JUDGE Sd/- N.ANIL KUMAR JUDGE okb/das