Ita/255/2010 Of The Commissioner Of Income Tax v. M/S.appolo Tyres Ltd,Kochi

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON & THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 10TH DAY OF APRIL 2019 / 20TH CHAITHRA, 1941 ITA.No. 255 of 2010 AGAINST THE ORDER IN MP No145/Coch/2009 DATED 8.1.2010 IN ITA25/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 08-01-2010 APPELLANT: THE COMMISSIONER OF INCOME TAXCOCHIN.BY ADVS.SRI.JOSE JOSEPH, SC, FOR INCOME TAXSRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENTRESPONDENTS:M/S.APPOLO TYRES LTD,KOCHI6TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI-31.BY ADVS.SRI.V.ABRAHAM MARKOSSRI.ABRAHAM JOSEPH MARKOSSRI.GOVIND VIJAYAKUMARAN NAIRSRI.HARAN THOMAS GEORGESRI.ISAAC THOMASSRI.NOBY THOMAS CYRIACTHIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON10.04.2019, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: JUDGMENT Bhatti, J. Heard the learned Standing Counsel, Mr.ChristopherAbraham, for the appellant and the learned senior counsel,Mr.Joseph Markose, for the respondent. 2. In this appeal, the Revenue assails the order of the Income Tax Appellate Tribunal, Cochin Bench in M.P.No.145/coch/2009dated 18.8.2009 in Tax Appeal No.25 of 2004. The admittedcircumstances leading to the filing of the instant Tax Appeal couldbe summarily stated as follows: 3. The subject matter of M.P.No.145/coch/2009 is the order for assessment year 1998-1999. The respondent/assessee filed ITANos.43/coch/2001 and 21 to 24/coch/2005 for the assessment years1996-1997 and 1997-1998. The assessee filed ITA Nos.538/coch/05,ITA No.273/coch/05 and ITA No.25/coch/04. These three appealsare dealing with the assessment years 1999-2000 and 1998-1999. TheIncome Tax Appellate Tribunal through common order dated18.8.2009 allowed in part ITA No.43/coch/01, ITA Nos.21 to 24/coch/05 were allowed and the appeals filed by the revenue weredismissed. The Tribunal through the common order dated 9.9.2009disposed of ITA Nos.538/coch/05, ITA No.273/coch/05 and ITANo.25/coch/2005. The result noted as per the order dated 9.9.2009in CTA No.25/coch/05 is that the appeal is allowed in part. Theassessee filed MP No.145/coch/2009 for correction or rectification ofa few inadvertant omissions noted by the assessee, in the order dated9.9.2009 in ITA No.25/2004. The case of assessee is that the IncomeTax Appellate Tribunal while rendering the order dated 9.9.2009 didnot consider ground No.15 raised in memo of grounds in ITANo.25/2004 which deals with the deduction claimed under Section80IA of the Income Tax Act. It is further stated that the Tribunal inthe common order dated 18.8.2009 in ITA No.43/coch/2001 andITA Nos.21 to 24/coch/2005 considered a similar ground on theentitlement of assessee for allowance under Section 80IA of theIncome Tax Act and granted the relief to assessee. The AppellateTribunal on account of inadvertant mistake did not considerGround No.15 in ITA 25/coch/2004 and allowed the said appeal inpart. The Tribunal after understanding the error sought to be corrected through Miscellaneous Petition No.145/Coch/2009,elaborated the omission pointed out in the common order dated18.8.2009. The Appellate Tribunal accepted the case of assessee andallowed deduction under section 80IA of the Act. The commonorder dated 18.8.2009 refers to a few orders passed by the Tribunal insimilar circumstances to which the assessee is a party. In the ultimateanalysis, the non-consideration of Ground No.15 in ITANo.25/2004, it is urged, needs re-consideration by following thecommon order dated 18.8.2009 in ITA No.25/2004. 4. The Appellate Tribunal through the order under appeal having noticed a few inadvertant typographical or clerical errorsaccepted the prayer in MP No.145/Coch/2009 in ITA 25/2004.Hence the instant appeal at the instance of the revenue. corrected through Miscellaneous Petition No.145/Coch/2009,elaborated the omission pointed out in the common order dated18.8.2009. The Appellate Tribunal accepted the case of assessee andallowed deduction under section 80IA of the Act. The commonorder dated 18.8.2009 refers to a few orders passed by the Tribunal insimilar circumstances to which the assessee is a party. In the ultimateanalysis, the non-consideration of Ground No.15 in ITANo.25/2004, it is urged, needs re-consideration by following thecommon order dated 18.8.2009 in ITA No.25/2004. 4. The Appellate Tribunal through the order under appeal having noticed a few inadvertant typographical or clerical errorsaccepted the prayer in MP No.145/Coch/2009 in ITA 25/2004.Hence the instant appeal at the instance of the revenue. 5. Before proceeding to examine the limited grounds raised bythe revenue against the order under appeal, we would like to advertto the following dates: 6. On 1.6.2010, the instant Tax Appeal was filed. The appealwas listed before the Court on 7.12.2010; 28.6.2016, 30.10.2018, 23.11.2018 and on 19.3.2019; adjourned at the request of appellant. The Tax Appeal is yet to be admitted. 7. The appellant raises the following substantial questions of law for consideration by this Court in the appeal filed against order in MP No.145/coch/2009. 1.a) Whether on the facts and in the circumstancesof the case and also in view of the fact that the amounthad not been advanced for carrying on the business ofthe assessee, the assessee is entitled to claim deductionof the same b)Whether on the facts and in the circumstances ofthe case— i)did the assessee discharge the burden of proof ii) did the assessee establish the claim of saving ofreputation iii)the assessee is entitled to the deduction. 2.Whether on the facts and in the circumstances of thecase [and as major part of the claim of bad debts written offis the investment made by the assessee in Mazda Industriesand Leasing Ltd. During April 1992 out of which thecompany could not recover the interest due for the yearended 31.3.1993 and also the principal amount] — i)the write off of the above investment as revenue loss isin accordance with law? ii)Can it be considered as “bad debts” allowable under Sec.36(1)(vii) as the condition specified in Sec.36(2) are notsatisfied? 8. The learned Standing Counsel appearing for the appellant contends that there is no error apparent on the record warrantingconsideration of any of the prayers made in the application,M.P.No.145/coch/2009. According to him, the assessee, if soadvised, ought to have challenged the common order dated 9.9.2009in ITA No.25/Coch/2004. At any rate, it is contended that theassessee is not entitled for deduction under Section 80IA of the Act,unless and until the assessee satisfactorily demonstrates all therequirements necessary in this behalf. Therefore he prays for settingaside the order under appeal and restore the orginal order dated9.9.2009 in ITA No.25/coch/2004. 9. Mr.Joseph Markose, the learned Senior Counsel for theassessee contends that the appeal is filed against the order inMiscellaneous Petition No.145/Coch/2009. There is no substantialquestion raised by the revenue except reproducing the statutoryrequirement for availing the deduction under Section 80IA of theAct. According to him, the revenue is not disputing the premise on 9. Mr.Joseph Markose, the learned Senior Counsel for theassessee contends that the appeal is filed against the order inMiscellaneous Petition No.145/Coch/2009. There is no substantialquestion raised by the revenue except reproducing the statutoryrequirement for availing the deduction under Section 80IA of theAct. According to him, the revenue is not disputing the premise on which the order dated 8.1.2010 in M.P.No.145/coch/2009 is madeby the Appellate Tribunal. According to him, the revenue is alsonot disputing the relief granted by the Tribunal to the assessee inthe common order dated 18.8.2009 in Tax AppealNo.538/coch/05/. At this length of time, a probable ground thatcould be raised by the revenue is that the common order dated18.8.2009 referred to or relied on in connected orders therein areinterdicted or set aside by the Superior Court. The very basis in theimpugned order if is erased, then the appellant could pray foradmission or hearing of appeal on merits. The learned SeniorCounsel relies on the order under appeal which admits the errorspointed out by the assessee and the Tribunal, as a matter of fact,admitted that the Tribunal failed to consider Ground No.15 raisedunder section 80IA of the Act. Keeping in view the conclusionsrecorded by Tribunal it contended that it is not for this Court tointerfere with the errors admitted by the Tribunal. He prays fordismissing the appeal. 10. We have in chronological order explained theconsideration of two different batches of appeals by the Tribunal and also the order passed by the Tribunal in this behalf. The Tribunal, while accepting the point raised in Ground No.15, held asfollows: "After considering the rival submissions, we are of the viewthat for the deduction under section 80IA, the gross totalincome of the assessee includes any profit or gains derivedfrom industrial undertaking. While computing totalincome deduction from such profits and gains has to beallowed for the purpose of deduction under section 80IA.Here in this case, it is not disputed by the Department thatthe assessee will qualify for section 80IA deduction.Therefore, the total income of the assessee includes anyprofit or gains derived from any business of an industrialundertaking. The only dispute before us is quantification.Therefore, we agree with the contentions of the Id. Counselfor the assessee that deduction has to be from the gross totalincome of the assessee which includes any profit or gainsderived from any business of industrial undertaking.Therefore, we set aside the order of the CIT(A) and restorethe issue back to the file of the Assessing Officer for properadjudication on merits. It is to be underlined that forqualification for deduction under section 80IA, thededuction is to be from the gross total income of theassessee which includes any profit or gains derived from anybusiness of industrial undertaking. Therefore, this issue isallowed in favour of the assessee for statistical purposes." From the above it is clear that the appellate tribunal, toensure consistency on the assessee's entitlement a deduction underSection 80IA of the Act, allowed the Miscellaneous Petition. We are From the above it is clear that the appellate tribunal, toensure consistency on the assessee's entitlement a deduction underSection 80IA of the Act, allowed the Miscellaneous Petition. We are prepared to take up the case for admission and issue notice to therespondents provided the substantial questions raised in this behalfconvince this Court that the reasons stated in the MiscellaneousPetition or the conclusions recorded by the Appellate Tribunal arein any manner vitiated. In the totality of the circumstances, we areconstrained to see whether the Tribunal while accepting the prayerin MP No.145/Coch/2009 has deviated from the procedure andentertained any ground not available within the four corners of law.For the reasons recorded in the common orders both dated18.8.2009 and 9.9.2009, the prayer in M.P.No.145/coch/2009 isaccepted by the Tribunal. No exception is pointed out against theorder under appeal. No substantial question of law arises forconsideration. The findings recorded in the impugned order are byreference to earlier orders passed by the Tribunal. The appeal failsand accordingly dismissed. Sd/-P.R.RAMACHANDRA MENON JUDGE sd/- S.V.BHATTI JUDGE APPENDIX ANNEXURE ACOPY OF MISCELLANEOUS PETITION FILED BY THEASSESSEE. ANNEXURE BCOPY OF THE ORDER DATED 8.1.2010 OF THE INCOMETAX APPELLATE TRIBUNAL, COCHIN BENCH MP NO.145/COCH/2009 FORTHE A.Y.1998-99. ANNEXURE CASSESSMENT ORDER U/S 143(3) OF THE IT ACT DATED19.3.2001 FOR AY 1998-99. ANNEXURE DTHE ORDER OF THE INCOME TAX (APPEALS) DATED21.10.2003 FOR AY 1998-99. ANNEXURE E THE COMPOSITE ORDER OF THE INCOME TAXAPPELLATE TRIBUNAL IN ITA NO.538, 273 (COCH)/05 FOR AY 1999-2000AND IN ITA NO.25/COCH/2004 FOR AY 1998-99 DATED 9.9.2009. ANNEXURE FTHE COMPOSITE ORDER OF THE ITAT IN ITA NO.43,21TO 24/COCH/2005 AND 84,111 AND 112/COCH/2004 FOR AY 1996-1997AND 1997-98 DATED 18.8.2009.