Tvl. The Savamalai Estates Ltd v. The State Of Tamil Nadu, Rep. By Agricultural Income Tax Officer, Pollachi

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.06.2006CORAM THE HONOURABLE MR.JUSTICE P.D.DINAKARAN THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.66 of 2002 Tvl. The Savamalai Estates Ltd.,No.3, Simon Layout,Annamalai Chettiar Road,Coimbatore-641 011....Applicant/Petitioner -Vs.- The State of Tamil Nadu,rep. by Agricultural Income Tax Officer,Pollachi.... Respondent/Respondent Revision under Section 54 of the Tamil Nadu Agricultural IncomeTax Act, 1955 to revise the order of the Tamil Nadu AgriculturalIncome Tax Appellate Tribunal, Madras dated 08.01.2002 passed inA.T.A. No.18 of 2001 against the order of the Tamil NaduAgricultural Income Tax Appellate Tribunal, Chennai-104 dated26.7.2001 against the order of the District RevenueOfficer/Assistant Commissioner (Agricultural Income Tax) Coimbatoredated 19.6.2001 in AP.26/2001/D against the order of theAgricultural Income Tax Officer, Pollachi dated 13.3.2001GIR.2S/2000-2001/Pollachi. (Order of the Court was made by P.P.S. Janarthana Raja, J) This revision is filed under Section 54 of the Tamil NaduAgricultural Income Tax Act, 1955 to revise the order of the Tamil https://hcservices.ecourts.gov.in/hcservices/ Nadu Agricultural Income Tax Appellate Tribunal (hereinafterreferred to as "Appellate Tribunal), Madras dated 08.01.2002 passedin A.T.A. No.18 of 2001, raising the following substantial questionsof law: (a) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in holding thatdisallowance could be restricted to 20% of theexpenditure incurred for use of all vehicles forprivate purposes due to non maintenance of logbooks? (b) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in holding thatdisallowance could be restricted to 20% onprobable private use of the vehicles inspite ofthe fact that the trip sheets produced do notindicate the use of vehicles for privatepurposes. (c) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in restricting thedisallowance of 20% inspite of the fact that thetrip sheets maintained by the assessee clearlyindicate the movement of the vehicles from placeto place with date time and purpose of visit,which would prove that the vehicles were usedfor agricultural purposes only? (d) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in not considering thefact that lorries were used within the Estatefor transporting coffee cherry and there cannotbe private use of any such vehicle and furtherin respect of jeeps in the Estate, the same wereprovided to the Estate Manager exclusively forhis use and hence there cannot be any personaluse by the company warranting disallowance ofexpenditure? (e) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in not considering thefact that there cannot be any personal use ofvehicles by a company as it is not a livingperson registered under the Companies Act havingperpetual entity? (f) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law that the order passed bythe Asst. Commissioner, Coimbatore was based ona report by the AITO vide letter dated 5.8.2001,copy of which was not furnished to theApplicants herein, which is against theprinciples of natural justice and restrictingthe disallowance to 20% of the total expenditurefor use of vehicles for private purposes? (f) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law that the order passed bythe Asst. Commissioner, Coimbatore was based ona report by the AITO vide letter dated 5.8.2001,copy of which was not furnished to theApplicants herein, which is against theprinciples of natural justice and restrictingthe disallowance to 20% of the total expenditurefor use of vehicles for private purposes? (g) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in restrictingdisallowance to 20% as in the originalassessment completed by the AITO, Pollachi, atotal agricultural income of Rs.8,53,432/- hasbeen determined, after making a disallowance ofexpenditure of Rs.5,85,662/- which includesRs.1,65,964/- in respect of expenditure onmaintenance of vehicles? (h) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in holding that therewas necessity for the usage of lorries forprivate purposes when the Directors have theirown cars? (i) Whether on the facts and in thecircumstances of the case, the Tamil NaduAgricultural Income Tax Appellate Tribunal,Madras was right in law in holding that theearlie order passed by them covered the presentcase while so it related only to restriction ofexpenditure in respect of motorcycle and not inrelation to any other vehicles in the estate?" 2. The brief facts leading to the above revision, are asfollows: The assessee is a Public Limited Company holding 665.14 acresof land. They are engaged in growing coffee crop of Arabica andRobusta varieties. The relevant assessment year is 2000-01. Theassessee company has filed income and expenditure showingagricultural income at Rs.2,87,770/-. The Assessing Officer arrivedat the taxable income at Rs.8,53,432/- and demanded a tax ofRs.2,03,059/- after adjusting the advance tax already paid. Whilecompleting the assessment, the Assessing Officer disallowed theamount of Rs.5,85,662.45 under various heads of expenses. Aggrievedby the order, the assessee filed an appeal to the AssistantCommissioner (Agricultural Income Tax), Coimbatore. The saidAssistant Commissioner (AIT), confirmed the assessment and dismissedthe appeal. Against the order of the said Assistant Commissioner(AIT), the assessee filed an appeal to the Appellate Tribunal. TheAppellate Tribunal restricted the disallowance to 20% as against 25%by the lower authorities in respect of maintenance of vehicles andpartly allowed the appeal. 3.The counsel appearing for the assessee submitted that theAppellate Tribunal was wrong in restricting the disallowance to 20%on probable private use of vehicles inspite of the fact that thetrip sheets do not indicate the use of vehicles for privatepurposes. 4.The learned Special Govt. Pleader (Taxes) appearing forthe State submitted that the Appellate Tribunal had considered allthe relevant materials and restricted the disallowance to 20% inrespect of maintenance of vehicles. Hence the finding of theAppellate Tribunal was based on evidence and there is no question oflaw involved for consideration of this Court. 5.We heard the counsel. The Appellate Tribunal in Para 17of the impugned order, held as follows: "17. The expenditure on the maintenance ofvehicles was claimed for lorry, Tata truck,Mahindra Jeep and Willy's Jeep. The apellantswere maintaining trip sheets. However, log bookwas not maintained. They submit that there wasno personal use of the vehicles by the Directorswho have their own cars. Considering similarmatter in the case of the appellants in A.T.A.No.40/98 dated 13.4.98, we have held that thedisallowance for possible personal use couldreasonably be restricted to 20% as against 25%. 5.We heard the counsel. The Appellate Tribunal in Para 17of the impugned order, held as follows: "17. The expenditure on the maintenance ofvehicles was claimed for lorry, Tata truck,Mahindra Jeep and Willy's Jeep. The apellantswere maintaining trip sheets. However, log bookwas not maintained. They submit that there wasno personal use of the vehicles by the Directorswho have their own cars. Considering similarmatter in the case of the appellants in A.T.A.No.40/98 dated 13.4.98, we have held that thedisallowance for possible personal use couldreasonably be restricted to 20% as against 25%. 20%."6. In this case also, as the appellants aremaintaining trip sheets for non-maintenance oflog books, disallowance can be restricted to20%." 6.The Appellate Tribunal merely followed the earlier orderof the assessee's own case relating to the assessment year 1997-98in Appeal No.9/98 dated 10.10.1998 and had restricted thedisallowance to 20%. The earlier Appellate Tribunal order formspart of the typed set and we have gone through the order. In thesaid earlier Appellate Tribunal's order, the Appellate Tribunalremanded the matter to the Assessing Officer with a direction toverify the details of expenditure and allow the claim in accordancewith law. In pursuance of the remand order of the AppellateTribunal, the Assessing Officer passed a consequential order videRef: G.I.R. No.23/97-98 dated 21.09.1999 and allowed the claim ofexpenditure relating to maintenance of motor vehicles. 7.In view of the above, we set aside the impugned order witha direction to the Assessing Officer to consider the issue aftergiving opportunity to the assessee and pass orders in accordancewith law. Accordingly, the tax case is disposed of. No costs.kmSd/Asst.Registrar/true copy/ Sub Asst.Registrar To1. The Agricultural Income Tax Officer,Government of Tamil Nadu,Pollachi. 2. The Tamil Nadu Agricultural Income Tax Appellate Tribunal,Chennai-104 3. The District Officer/Assistant Commissioner,(Agricultural Income Tax) Coimbatore. 4. The Secretary,Central Board at Direct Taxes, New Delhi.1 cc to Special Government Pleader (Taxes)SR.25867tej (co)dv/4.7.06 Tax Case (Appeal) No.66 of 2002