Op/1687/2002 Of M/S.harrisons Malayalam Ltd v. Jt.commissioner Of Income Tax,Ekm

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN MONDAY, THE 17TH MARCH 2008 / 27TH PHALGUNA 1929 OP.No. 1687 of 2002(A) PETITIONER: M/S. HARRISONS MALAYALAM LIMITED, WILLINGDON ISLAND, KOCHII - 682 003, REP. BY ITS COMPANY SECRETARY, MR.P.A.KRISHNAMOORTHY. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENTS: 1. JOINT COMMISSIONER OF INCOME TAX (ASSMT) SPECIAL RANGE-II, I.S. PRESS ROAD, ERNAKULAM. 2. COMMISSIONER OF INCOME TAX (ASSMT), SPECIAL RANGE-I, I.S. PRESS ROAD, ERNAKULAM. 3. UNION OF INDIA, REP. BY ITS SECRETARY TO GOVERNMENT, DEPARTMENT OF FINANCE, MINISTRY OF FINANCE, NEW DELHI. 4. INSPECTING ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX AND SALES TAX (SPECIAL) COMMERCIAL TAXES COMPLEX, PERUMANOOR, ERNAKULAM. 5. COMMISSIONER OF AGRICULTURAL INCOME TAX, PUBLIC OFFICE BUILDING, THIRUVANANTHAPURAM. 6. STATE OF KERALA, CHIEF SECRETARY TO GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT GOVERNMENT PLEADER SRI. TCR CHAND THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 17/03/2008, ALONG WITH O.P. NOS. 1712 & 1713/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP NO. 2887/2002 IN O.P. 1687/2002 // DISMISSED // 17.3.2008. SD/-, P.R. RAMAN, JUDGE. PETITIONER'S EXHIBITS: APPENDIX // TRUE COPY // P.S. TO JUDGE. P.R. RAMAN, J.= = = = = = = = = O.P. NOS. 1687, 1712 & 1713/2002 NO.= = = = = = = = = = = = = = = = = = = = = = DATED THIS, THE 17TH DAY OF MARCH, 2008. J U D G M E N T M/s. Harrisons Malayalam Limited is the petitioner in all theseoriginal petitions. The issue that arises for consideration in all these writpetitions is the same. 2. Petitioner was assessed under the Agricultural Income Tax Act bythe State, returning the entire income from rubber including the incomefrom Centrifuged latex, Pale Latex Crepe, Estate Brown Latex etc. asagricultural income. Though the petitioner is also assessed under theIncome tax Act, the income derived from the items referred to above werenot included for the purpose of income tax under the Central Income TaxAct. In other words, petitioner was assessed to agricultural income aloneunder the Agricultural Income tax Act by the State. Subsequently, based onthe decision of this Court in Kanam Latex Industries Pvt. Ltd. (221 ITR 1)the Income Tax Authorities proposed to assess the income from sale ofCanex, PLC and EBC as "Business Income". If this happens, theimmediate result will be that the petitioner will be mulcted with the liability O.P. 1687, 1712 & 1713/02 to pay tax on the same income both under the Agricultural Income Tax Actby the State as also by the Income Tax Authorities under the Income TaxAct. To over-ride the hardship that may be caused in this regard, theCentral Board of Direct Taxes issued Circular No.5 of 2003 dated 22ndMay, 2003 which contained in 261 ITR 159 clarifying that no proceedingsunder Section 147 or under Section 263 of the Income-tax Act, 1961, shouldbe initiated for the assessment year(s) prior to the assessment year 2002-03in the cases of assessees earning income from manufacture of rubber and/orcoffee, for determining the income liable to income-tax, if the assessees hadalready paid agricultural income-tax on the whole of such income. Assuch, the C.B.D.T. Circular No.5/2003 dated 22.5.2003 is squarely attractedin the case of the petitioner in these cases. 3. Admittedly, the assessment orders produced by the petitionerswould show that he was assessed for agricultural income and the incomefrom rubber was also included. It was while so, notices were issued by theJoint Commissioner of Income-tax proposing to revise the assessmentbased on the decision in Kanam Latex Industries' case as stated supra andit was subsequently, that the clarification has been issued. As a result, theJoint Commissioner had no occasion to apply the circular before issuingnotice. O.P. 1687, 1712 & 1713/02 In view of the position as explained above, petitioner has to be givenrelief based on the circular. In similar matters, this court had earlier orderedthat the proceedings will stand closed in view of the circular issued.Accordingly, these writ petitions are allowed and in view of the circular asreferred to above, the matter will stand closed. P.R. RAMAN,(JUDGE) knc/- O.P. 1687, 1712 & 1713/02 :4: P.R. RAMAN, J.= = = = = = = = O.P. NOS:-1687, 1712 & 1713/2002 J U D G M E N T DATED: 17.3.2008.