Op/13519/1999 Of Thirumbadi Brubber Co.ltd v. Dy.commr. Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR TUESDAY, THE 13TH NOVEMBER 2007 / 22ND KARTHIKA 1929 OP.No. 13519 of 1999(H) ----------------------- PETITIONER: ------------ 1. THE THIRUMBADI RUBBER CO. LTD., "COWCOODY CHAMBERS" 234-A, RACE COURSE ROAD, COIMBATORE 641 018 234-A, RACE COURSE ROAD, COIMBATORE 641 018 2. H.C. LAKHANI, DIRECTOR, DO.DO. BY ADV. SRI.P.BALACHANDRAN RESPONDENTS: ------------- 1. DEPUTY COMMISSIONER OF INCOME TAX (ASSMT.), SPECIAL RANGE-I, ERNAKULAM. SPECIAL RANGE-I, ERNAKULAM. 2. INSPECTING ASSISTANT COMMISSIONER (SPL.) AGRICULTURAL INCOME TAX AND SALES TAX, KOZHIKODE. AGRICULTURAL INCOME TAX AND SALES TAX, KOZHIKODE. 3. UNION OF INDIA, REPRESENTED BY SECRETARY TO REVENUE DEPARTMENT, MINISTRY OF FINANCE, CENTRAL BLOCK, NEW DELHI 110 001. MINISTRY OF FINANCE, CENTRAL BLOCK, NEW DELHI 110 001. 4. CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI 110 001 OF FINANCE, NEW DELHI 110 001 5. COMMISSIONER OF INCOME TAX, CR BUILDINGS, I.S. PRESS ROAD, COCHIN 682 018 COCHIN 682 018 R3 AND R4 BY ADV. SRI.N.SUGATHAN R1, R2 & R5 BY ADVS. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 13/11/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON 21819 OF 1999 IN OP 13519 OF 1999 DISMISSED 13.11.2007SD/-C.N.RAMACHANDRAN NAIR, JUDGE. APPENDIX PETITIONERS' EXHIBITS: EXT.P1 TRUE COPY OF INTIMATION ISSUED BY RESPONDENT NO.1 DATED 23.3.1995 EXT.P2 TRUE COPY OF THE ASSESSMENT ORDER UNDER SECTION 143(3) PASSED BY THEFIRST RESPONDENT DATED 22.1.1997 EXT.P3 TRUE COPY OF THE ASSESSMENT ORDER DATED 5.12.1996 PASSED BY THE SECONDRESPONDENT. EXT.P4 TRUE COPY OF THE ORDER PASSED UNDER SECTION 263 BY THE FIFTHRESPONDENT DATED 23.2.1999. RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- O.P. NO. 13519 OF 1999 -------------------------------------------- Dated this the 13th day of November, 2007 JUDGMENT O.P. is filed challenging the order issued under Section 263 of theIncome-tax Act by the Commissioner of Income-tax directing therevision of petitioner's income-tax assessment for the assessment year1994-95 to include income from centrifuging of rubber. Centrifugingof natural rubber was initially not treated as industrial operation by theIncome-tax Department and therefore no income tax assessment wasmade on income therefrom. However, by virtue of later decision of thisCourt holding it as a manufacturing activity, the department proceededto assess income from centrifuging of rubber. Even though the orderunder challenge is tenable by virtue of decision of this Court, theCentral Board has vide circular No. 5/2003 dated 22.5.2003 decidednot to reopen any case prior to 2002-03 if the assessees have paidagricultural income-tax. Even though documents are not produced,counsel for the petitioner submitted that agricultural income-tax due forthe relevant year was paid by the company and the same will be borne out by assessment records of Agrl. income tax department. Going bythe practice of assessees generally, petitioner would have paidagricultural income tax on income from centrifuging of rubber also, asit was all through treated as processing of agricultural produce to makeit fit for marketing. In the circumstances, O.P. is disposed of directingthe Joint Commissioner of Income-tax (Assessment) to verify the AITrecords of the petitioner and if income from centrifuging of rubber isassessed for the relevant year, to drop the proceedings pursuant to thedirection issued by the Commissioner of Income tax under theimpugned order issued under Section 263 of the I.T. Act or proceed tomake assessment based on the said order, only if he finds that incomefrom centrifugal latex was not assessed to agricultural income tax.