Ita/342/2009 Of The Commissioner Of Income Tax v. M/S South India Corporation Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON & THE HONOURABLE MR.JUSTICE N.ANIL KUMAR FRIDAY ,THE 07TH DAY OF DECEMBER 2018 / 16TH AGRAHAYANA, 1940 ITA.No. 342 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 87/2001 of I.T.A.TRIBUNAL,COCHINBENCH DATED 18-03-2004 APPELLANT/S: THE COMMISSIONER OF INCOME TAXCOCHIN. BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAX RESPONDENT/S: M/S SOUTH INDIA CORPORATION LTD.W/ISLAND, COCHIN-3. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 07.12.2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT P.R. Ramachandra Menon,J. The challenge in the appeal preferred by the Income TaxDepartment, raising substantial question of law in terms ofSection 260A of the Income Tax Act, 1961, is mainly whetherdepreciation is allowable on the capital expenditure of fee paidto the Registrar of Companies for enhancement of the sharecapital. 2. The sequence of events shows that the assessmentwas completed in respect of the respondent company underSection 143(3) of the Act for the assessment year 1997-1998determining the total income as Rs.11,82,32,550/- as againstthe declared income of Rs.11,52,82,220/-. When theassessment was completed by the assessing officer, the claimfor deduction of a sum of Rs.14,36,000/-, which denotes thefee paid to the Registrar of Companies for enhancement of theshare capital was disallowed, as per Annexure A order, also onthe ground that it is not related to any asset and hence theassessee is not entitled to claim depreciation on an intangibleasset. The matter was taken up in appeal, but interference was declined and the appeal was dismissed as per Annexure Border. This was subjected to challenge before the Income TaxAppellate Tribunal and after hearing both the sides, Annexure Dorder was passed by the Tribunal on 18.3.2004 placing relianceon a similar order passed by the Tribunal in respect of theprevious year as disclosed from Annexure C. As per the saidorder, the Tribunal remanded the matter to the AppellateAuthority for fresh consideration, which, in turn, is underchallenge before this Court raising the substantial questions oflaw in the following terms: 1. Whether, on the facts and in the circumstances of the case, theTribunal is right in law and fact in holding that the depreciation isautomatic on a capital expenditure.Tribunal is right in law and fact in holding that the depreciation isautomatic on a capital expenditure. 2. Whether, on the fact and in the circumstances of the case, the assesseeis entitled to depreciation on the capital expenditure.is entitled to depreciation on the capital expenditure. 3. Heard Mr.Jose Joseph, the learned Standing Counsel for the appellant at length. 4. Obviously, the matter was filed before this Court in theyear 2009; but the same stands still to be admitted, nor isthere any interim order staying Annexure D order passed bythe Tribunal. As per Annexure D order, the matter has been 4 remanded to be considered afresh by the Appellate Authority inthe light of the observations made therein. Whether theproceedings have been finalised by the Appellate Authority isnot known. Any how, since it was only a remand and furthersince there was no interim stay, the further course of actiondepends upon the order passed (or to be passed) by theAppellate Authority. If the Appellate Authority has passed anyorder in favour of the revenue, there cannot be any furthergrievance for the appellant and it is for the assessee to have ittaken up by filing appropriate proceedings. On the other hand,if it is decided against the Revenue, it is for the Revenue tochallenge the said order and not Annexure D. 4 remanded to be considered afresh by the Appellate Authority inthe light of the observations made therein. Whether theproceedings have been finalised by the Appellate Authority isnot known. Any how, since it was only a remand and furthersince there was no interim stay, the further course of actiondepends upon the order passed (or to be passed) by theAppellate Authority. If the Appellate Authority has passed anyorder in favour of the revenue, there cannot be any furthergrievance for the appellant and it is for the assessee to have ittaken up by filing appropriate proceedings. On the other hand,if it is decided against the Revenue, it is for the Revenue tochallenge the said order and not Annexure D. 4. The learned Standing Counsel concedes that theearlier order, Annexure C, was not subjected to challengebecause of the meagre quantum involved and hence thatcannot be a bar with regard to their right to challengeAnnexure D order. As mentioned already, since the furthercourse of action can only be with reference to the orderpassed/to be passed by the Appellate Authority (pursuant tothe order of remand), this Court is of the view that the subject okb matter involved in the present appeal does not require anyindependent consideration. Accordingly the appeal is dismissedwithout prejudice to the rights and liberties of the partiesconcerned to proceed with further steps, in accordance withlaw. The substantial questions of law raised before this Courtare left open. Sd/- P.R. RAMACHANDRA MENON Judge Sd/- N. ANIL KUMAR Judge //True copy// P.A. to Judge