Op/7653/2002 Of M/S.rajagiri Rubber And Produce Coltd v. Joint Commissioner Of Income Tax

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. 7653 OF 2002(J) PETITIONER: M/S.RAJAGIRI RUBBER AND PRODUCE CO. LTD. PANAMPILLY NAGAR, KOCHI-682 036, REP. BY ITS VICE PRESIDENT(FINANCE), MR.R.VENUGOPALAN. BY ADVOCATES:- 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, KOTTAYAM. 2. COMMISSIONER OF INCOME TAX, KAWDIAR, THIRUVANANTHAPURAM. 3. UNION OF INDIA, REP. BY ITS SECRETARY, TO GOVERNMENT, DEPARTMENT OF REVENUE, 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 INCOMETAX PUBLIC OFFICE BUILDING, THIRUVANATHAPURAM. 6. STATE OF KERALA, CHIEF SECRETARY TO GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI. TEK CHAND SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 17/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP NO. 13753/2002 IN O.P. 7653/2002 // DISMISSED // SD/-, P.R. RAMAN, JUDGE. 17.3.2008. APPENDIX RESPONDENTS' EXHIBITS: NIL. // TRUE COPY // P.S. TO JUDGE. KNC/- P.R. RAMAN, J. = = = = = = = = = O.P. NO 7653/2002 = = = = = = = = = = = = DATED THIS, THE 17TH DAY OF MARCH, 2008. J U D G M E N T Petitioner is a Public Limited Company engaged in the rubber plantationand manufacture of centrifuged latex etc. 2. Petitioner was assessed under the Agricultural Income Tax Act by the State,returning the entire income from rubber including the income from Centrifuged latex asagricultural income. Petitioner is also assessed under the Income tax Act. But there isno proposal to include the income derived from the items referred to above for thepurpose of income tax under the Central Income Tax Act. In other words, petitionerwas assessed to agricultural income alone under the Agricultural Income tax Act by theState. Subsequently, based on the decision of this Court in Kanam Latex IndustriesPvt. Ltd. (221 ITR 1) the Income Tax Authorities proposed to assess the income fromcentrifuged latex as "Business Income". If this happens, the immediate result will bethat the petitioner will be mulcted with the liability to pay tax on the same income bothunder the Agricultural Income Tax Act by the State as also by the Income TaxAuthorities under the Income Tax Act. To over-ride the hardship that may be caused inthis regard, the Central Board of Direct Taxes issued Circular No.5 of 2003 dated 22nd May, 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 this case. 3. Admittedly, the assessment orders produced by the petitionerwould show that he was assessed for agricultural income and the incomefrom centrifuged latex was also included. It was while so, notices wereissued by the Joint Commissioner of Income-tax proposing to revise theassessment based on the decision in Kanam Latex Industries' case asstated supra and it was subsequently, that the clarification has been issued.As a result, the Joint Commissioner had no occasion to apply the circularbefore issuing notice. 3. Admittedly, the assessment orders produced by the petitionerwould show that he was assessed for agricultural income and the incomefrom centrifuged latex was also included. It was while so, notices wereissued by the Joint Commissioner of Income-tax proposing to revise theassessment based on the decision in Kanam Latex Industries' case asstated supra and it was subsequently, that the clarification has been issued.As a result, the Joint Commissioner had no occasion to apply the circularbefore issuing notice. 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. O.P. 7653/2002 Accordingly, this writ petition is allowed and in view of the circular asreferred to above, the matter will stand closed. P.R. RAMAN,(JUDGE) knc/- P.R. RAMAN, J.= = = = = = = =O.P. 7653/2002J U D G M E N T DATED: 17.3.2008.