Op/29672/2001 Of The Thirumbadi Rubber Co. Ltd v. Jt. Commr. Of Incometax Spl. Range,Ekm

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 13TH DECEMBER 2007 / 22ND AGRAHAYANA 1929 OP.No. 29672 of 2001(G) ----------------------- PETITIONERS: -------------------- 1. THE THIRUMBADI RUBBER CO. LTD. “COWCOODY CHAMBERS” 234-A, RACE COURSE ROAD, COIMBATORE - 641 018. 2. H.C. LAKHANI, DIRECTOR, THE THIRUMBADI RUBBER CO. LTD, RUBBER CO. LTD, 234-1, RACE COURSE ROAD, COIMBATOE - 641 018. COIMBATOE - 641 018. BY ADV. SRI.P.BALACHANDRAN RESPONDENTS: ---------------------- 1. JOINT COMMISSIONER OF INCOME TAX (ASSMT), SPECIAL RANGE - I, ERNAKULAM. SPECIAL RANGE - I, ERNAKULAM. 2. INSPECTING ASSISTANT COMMISSIONER ( SPL) AGRICULTURAL INCOME TAX & SALES TAX, KOZHIKODE. AGRICULTURAL INCOME TAX & SALES TAX, KOZHIKODE. 3. UNION OF INDIA REPRESENTED BY SECRETARY TO REVENUE DEPARTMENT, MINISTRY OF FINANCE, CENTRAL BLOCK, NEW DELHI - 110 001. SECRETARY TO REVENUE DEPARTMENT, 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. DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI - 110 001. 5. COMMISSIONER OF INCOME TAX, CR BUILDINGS, I.S. PRESS ROAD, COCHIN - 682 018. CR BUILDINGS, I.S. PRESS ROAD, COCHIN - 682 018. BY ADV. SRI.C.P.RAVIKUMAR, ADDL.CGSC SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 13/12/2007, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON C.M.P. 48172 OF 2001 IN O.P. 29672 OF 2001. DISMISSED. 13.12.2007. SD/- K.M. JOSEPH, JUDGE. APPENDIX PETITIONER'S EXTS: EXT. P1 : A TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX, COCHIN. EXT. P2 : A TRUE COPY OF THE ASSESSMENT ORDER UNDER THE AGRICULTURALINCOMETAX ACT. EXT. P3 : A TRUE COPY OF THE ASSESSMENT ORDER. EXT. P4 : A TRUE COPY OF THE LETTER BY THE PETITIONER TO R1. EXT. P5 : A TRUE COPY OF THE LETTER BY R1 TO THE PETITIONER. EXT. P6 : A TRUE COPY OF THE LETTER BY THE PETITIONER TO R1. EXT. P7 : A TRUE COPY OF THE ASSESSMENT ORDER. EXT. P7(a) : A TRUE COPY OF THE RECTIFICATION ORDER BY R1. EXT. P8 : A TRUE COPY OF THE ORDER UNDER THE KERALA AGRL. INCOME TAX ACT,1991. EXT. P9 : A TRUE COPY OF THE ASSESSMENT ORDER FOR 98-99. EXT. P10: A TRUE COPY OF THE RECTIFICATION ORDER BY R1. EXT. P11 : A TRUE COPY OF THE ORDER UNDER THE KERALA AGRL. INCOME TAX ACT, 1991. EXT. P12 : A TRUE COPY OF THE ORDER OF THE DY.COMMISSIONER OF INCOME TAX (APPEALS) COMMERCIAL TAXES, KOZHIKODE. K.M.JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - - -O.P. No.29672 of 2001 - - - - - - - - - - - - - - - - - - - - - - - - -Dated this the 13th day of December, 2007 JUDGMENT Heard counsel for the petitioner and the learned StandingCounsel Sri. George K. George, appearing on behalf of the Department. Itis common case that the question at hand is covered in favour of thepetitioner. 2. Petitioner calls in question Exts.P1, P3, P7, P7(a), P9 andP10 orders passed under the Indian Income Tax Act. Apparently thequestion is whether income derived by the petitioner when latex isconverted into centrifuged latex, the manufacturing activity makes theincome exigible to Income Tax Act. That matter engaged the attention ofthe Central Board, which has issued a Circular, which is produced in 261ITR 158. As per the Circular, it is submitted by the learned StandingCounsel that in respect of assessments prior to 2002-2003 if the assessee haspaid agricultural income tax under the Agricultural Income tax Act on thewhole of the income, no proceedings under Section 147 or under Section263 of the Income-tax Act should be initiated. If tax is not paid by theassessee under the Agricultural Income Tax Act in respect of the said years,the income, which is to be treated as agricultural income, and which is to be O.P. 29672/2001. 2 O.P. 29672/2001. 2 treated as income under the Income-tax Act shall be apportioned and the taxliability fixed accordingly. It is pointed out that the rule has been insertedas Rules 7A and 7B of the Income-tax Rules. 3. In such circumstances, the primary question to beconsidered would be as to whether petitioner has paid agricultural income-tax in respect of the assessments in question. The assessments in questionrelates to the periods prior to 2002. Accordingly, the Original Petition isdisposed of as follows:There will be a direction to the first respondent to consider thequestion as to whether the petitioner has effected payments under the KeralaAgricultural Income-tax in respect of its income derived from conversion oflatex into centrifuging latex for the assessment years in question. If it isfound by the first respondent that on the basis of the materials producedbefore him by the petitioner, petitioner has paid tax under the AgriculturalIncome-tax Act in respect of the income derived from conversion intocentrifuged latex, the proceedings raised against the petitioner as impugnedin this writ petition shall stand dropped in terms of the Circular. If the firstrespondent on the other hand finds that the petitioner has not paid tax inrespect of centrifuged latex for the years in question, proceedings ascontemplated under Rules 7A and 7B of the Rules can be taken against the O.P. 29672/2001. petitioner for those assessment years. The first respondent shall complete this process within a period of one month from the date of receipt of a copy of this judgment. (K.M. JOSEPH, JUDGE) sb K.M. JOSEPH, J. --------------------------------- O.P. No.29672 of 2001 --------------------------------- JUDGMENT 13.12.2007.