Ita/3/2015 Of Malankara Plantations Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY TUESDAY, THE 21ST DAY OF JULY 2015/30TH ASHADHA, 1937 I.T.A.No. 3 of 2015 ------------------------AGAINST THE ORDER IN ITA 687/2013 of I.T.A.TRIBUNAL, COCHIN BENCH, DATED 14-03-2014 APPELLANT/RESPONDENT: ------------------------------------- MALANKARA PLANTATIONS LTD. MALANKARA BUILDING, KODIMATHA, BY ADVS.SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS KOTTAYAM - 686 039 RESPONDENT/APPELLANT: ------------------------------------- THE ASSISTANT COMMISSIONER OF INCOME TAX KOTTAYAM - 686 001. R BY SRI.JOSE JOSEPH, SC FOR INCOME TAX SRI.P.K.R.MENON, SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 21-07-2015, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A.No. 3 of 2015 APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A: TRUE COPY OF THE ASSESSMENT ORDER DATED31.12.2010 PASSED BY THE RESPONDENT FOR THE ASSESSMENTYEAR 2008-2009. ANNEUXRE B: TRUE COPY OF APPELLATE ORDER DATED 28.8.2013PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - IV,KOCHI. ANNEXURE C: TRUE COPY OF ITA NO.697/COCH/2013 DATED1.11.2013 FILED BY THE RESPONDENT BEFORE THE INCOME TAXAPPELLATE TRIBUNAL, KOCHI BENCH. ANNEXURE D: CERTIFIED COPY OF IMPUGNED ORDER DATED14.3.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, KOCHIBENCH IN ITA NO.687/COCH/2013. // TRUE COPY // P.A. TO JUDGE ANTONY DOMINIC & SHAJI P. CHALY, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.No.3 of 2015 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 21[st] day of July, 2015 Antony Dominic, J. JUDGMENT The assessee has filed this appeal aggrieved by the order passed bythe Income Tax Appellate Tribunal, Cochin Bench, in ITA 687/13 which wasfiled by the Revenue. 2. The assessee, is a company which had given certain loans and had leased out its machineries to a subsidiary company. It was entitled toreceive interest for the loans and for the machineries leased out it wasentitled to rental income. In the returns filed, the accruals of interest andrental income were returned as income from other sources as providedunder Section 56 of the Income Tax Act. 3. Since the subsidiary company was incurring huge losses, theassessee had written off interest and lease charges and claimed itsdeduction in the assessment year 2008-2009. The Assessing Officerconsidered the said claim under Section 57(iii) of the Act and disallowedthe deduction. The appeal filed before the Commissioner was allowed infavour of the assessee. 4. The appellate order was challenged by the Revenue before theTribunal and the Tribunal restored the order of the Assessing Officer. It is in this background, this appeal has been filed by the assessee and thequestion of law framed is mainly whether on the facts of the case, theAppellate Tribunal is right in confirming the disallowance of the claimfor interest and lease rentals written off. 5. We heard the senior counsel for the appellant and the seniorcounsel appearing for the Revenue and considered the submissionsmade. 4. The appellate order was challenged by the Revenue before theTribunal and the Tribunal restored the order of the Assessing Officer. It is in this background, this appeal has been filed by the assessee and thequestion of law framed is mainly whether on the facts of the case, theAppellate Tribunal is right in confirming the disallowance of the claimfor interest and lease rentals written off. 5. We heard the senior counsel for the appellant and the seniorcounsel appearing for the Revenue and considered the submissionsmade. 6. As we have already stated, the income in question wasreturned as income from other sources. When an income has beenreturned as income from other sources, one of the heads of incomeprovided in Section 40, deduction can also be only under the provisionsin the same head of income. Therefore, in respect of income from othersources, deduction of income is permissible only under Section 57, subsection (iii) of which provides for deduction of any other expenditure(not being in the nature of capital expenditure) laid out or expendedwholly or exclusively for the purpose of making or earning suchincome. Evidently, this provision is not attracted in the case in questionand, therefore, the Assessing Officer has rightly declined the claims ofthe assessee. 7. Before us, learned counsel contended that the assessee wasentitled to claim deduction under Section 36(vii), which enablesdeduction of any bad debt or part thereof which is written off asirrecoverable in the accounts of the assessee for the previous year,subject to the provisions of Section 37(2). In so far as this claim of theappellant is concerned, first of all, such a contention was not raisedbefore any of the lower authorities. Not only that, as rightly pointed outby the learned Senior Counsel for the Revenue deduction under Section36 is permissible only in so far as the income under the head 'profitsand gains of business or profession'. Therefore, this claim of theassessee also cannot be sustained. We do not find anything illegal in theconclusions of the Tribunal. Therefore, answering the question raised against the appellant,appeal is dismissed. ANTONY DOMINIC JUDGE SHAJI P. CHALY JUDGE