Ita/270/2009 Of The Commissioner Of Income Tax v. M/S.island Seafoods P.ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 17TH MARCH 2010 / 26TH PHALGUNA 1931 ITA.No. 270 of 2009() --------------------- ITA.564/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: ----------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT: --------------- ISLAND SEAFOOD PVT. LTD., WILLINGDON ISLAND, COCHIN-682003. ADV. SRI.A.KUMAR FOR R1 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17/03/2010, ALONG WITH ITA NOS.995,1029,1100 & 1101 OF 2009,THE COURT ON 17/03/2010 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.270,995,1029,1100 & 1101 of 2009 .................................................................... Dated this the 17th day of March, 2010. JUDGMENT Ramachandran Nair, J. Appeals are filed by the Revenue against orders of the Tribunalcancelling rectification order issued under Section 154 upheld by thefirst appellate authority for the assessment years 1999-2000 to 2003-2004. We have heard Standing Counsel appearing for the appellantand Adv. Sri.A.Kumar appearing for the respondent-assessee. 2. In the assessments completed for the above years, unabsorbedbusiness loss carried forward was disallowed by rectifying originalassessments under Section 154 holding that since assessee discontinuedbusiness, business loss from earlier years cannot be carried forward forthe subsequent year. The assessee's case was that electricity supplywas disconnected on assessee's request because business was dull.However, according to the assessee, industry remained only dormantfor business to commence later. So much so, it cannot be said thatassessee has closed down business, was the contention. During the ITA 270/09&conn.cases assessment years 1999-2000 and subsequent years, the AssessingOfficer noticed from Profit and Loss Account and the minutes of themeeting of the Board of Directors that the assessee had disconnectedpower supply and in fact, the freezing plant was notified for sale whichmeans that business was closed once for all. If these are the facts, thencertainly assessee is not entitled to carried forward benefit underSection 72 of the Income Tax Act which was disallowed in rectificationproceedings under Section 154. However, counsel for the assesseecontended that business could be dormant for a few years and thereafterif the assessee restarts business, then certainly during the period ofdormancy disallowance could not be made. Even though there is nomaterial to find that assessee has restarted business at any time in thenear future, we still feel one more opportunity can be given for theAssessing Officer to verify whether assessee really did not sellmachinery and after a period of lull, they restarted the business. In anycase we do not find any justification for the Tribunal to hold that theissue is debatable because the records of the case itself prove thatassessee had disconnected power supply and invited tenders for sale of the machinery which establish beyond doubt that business was closed.Therefore, we allow the appeals by vacating the orders of the Tribunal.However, since the counsel contended that assessee probably wouldhave started business, we direct the Assessing Officer to verify theassessment records and find out whether assessee has atleast startedbusiness in the financial year 2003-2004 and if so, the order underSection 154 confirmed by the first appellate authority will standcancelled and the Assessing Officer will allow the carried forwardbusiness loss. C.N.RAMACHANDRAN NAIRJudge pms P.S.GOPINATHANJudge