Wp(C)/32889/2019 Of M/S Malankara Plantations Ltd v. Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 24 DAY OF JULY 2023 / 2ND SRAVANA, 1945 WP(C) NO. 32889 OF 2019 PETITIONER/S: M/S MALANKARA PLANTATIONS LTD., MALANKARA BUILDINGS, KODIMATHA, KOTTAYAM - 686 039, REPRESENTED BY ITS MANAGING DIRECTOR MR. J.K. THOMAS. BY ADVS. ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS SRI.P.G.CHANDAPILLAI ABRAHAM SHRI.VIPIN ANTO H.M. SHRI.ALEXANDER JOSEPH MARKOS SHRI.SHARAD JOSEPH KODANTHARA RESPONDENT/S: ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -I, KOTTAYAM - 686 001. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR HEARING ON 24.07.2023, ALONG WITH WP(C).37619/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 24 DAY OF JULY 2023 / 2ND SRAVANA, 1945 WP(C) NO. 37619 OF 2018 PETITIONER/S: M/S. MALANKARA PLANTATIONS LIMITED MALANKARA BUILDINGS, KODIMATHA, KOTTAYAM 686039, REPRESENTED BY ITS MANAGING DIRECTOR, MR. J.K. THOMAS. BY ADVS. ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS RESPONDENT/S: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -I, KOTTAYAM 686001 CIRCLE -I, KOTTAYAM 686001 2 THE COMMISSIONER OF INCOME TAX (APPEALS), KOTTAYAM-686001. BY ADVS. SRI.P.K.RAVINDRANATHA MENON (SR.) JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR HEARING ON 24.07.2023, ALONG WITH WP(C).32889/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T [WP(C) Nos.32889/2019, 37619/2018] Heard Sri Joseph Markos, learned Senior Counsel for the petitioner and Sri Jose Joseph, learned Standing Counsel for the Revenue. 2. The present writ petition under Article 226 of the Constitution of India has been filed impugning the Assessment Order dated 12.11.2019 passed by the Assessing Authority assessing the total income of the petitioner as Rs.1,80,31,560/- for the Assessment Year 2017-18. The petitioner has also challenged the notice dated 14.11.2019 issued under Section 274 read with 270A of the Income Tax Act 1961. 3. The learned Senior Counsel for the petitioner, as well as the learned Standing Counsel for the Revenue, are in consensus ad idem that the issue involved in the writ petition is covered by a Full Bench decision of this Court dated 1[st] August 2022 in Income Tax Appeal No.201/2013 and connected Income Tax Appeals. 4. The question which was for consideration before the Full Bench would read as under: “Whether the assessee/Plantation Companies under Rule 7A(2) of the Rules are entitled to an allowance towards replanting expenses and a further deduction towards upkeep and maintenance expenses incurred by the assessee for the immature plants till the age of maturity in the computation of income under the act and Rules.” 4.1 The Full Bench has answered the said question in the affirmative, which read as under: “In the computation of business income under Rule 7A of the Rule 1962, the assessee under Rule 7A(2) is entitled to an allowance in respect of the cost of replacement of dead and useless rubber trees in the rubber plantation in an area not abandoned, subject to Section 10(31) of Act 1961. The upkeep and maintenance expenses incurred by the assessee till the maturity of rubber trees are revenue expenditures eligible for deduction under Section 37 of Act 1961.” WPC 37619/2018 5. The present writ petition under Article 226 of the Constitution of India has been filed for the following prayers: “(I) call for the records relating to Exhibits P8 to P11 and quash the same by the issue of a writ of certiorari or other appropriate writ, direction or order. (II) Stay the operation and implementation of Exts.P8 to P11 pending disposal of this writ Petition. WPC 37619/2018 5. The present writ petition under Article 226 of the Constitution of India has been filed for the following prayers: “(I) call for the records relating to Exhibits P8 to P11 and quash the same by the issue of a writ of certiorari or other appropriate writ, direction or order. (II) Stay the operation and implementation of Exts.P8 to P11 pending disposal of this writ Petition. (III) pass such other interim or incidental orders as this Hon'ble Court deems fit in the circumstances of the case.” 6. In view of the aforesaid pronouncement by the Full Bench, the writ petitions are allowed. The impugned orders passed disallowing the claim of the assessee are set aside for the deduction of expenditure as the cost of replacement of dead and useless rubber trees in the rubber plantation in an area not abandoned, subject to Section 10(31) of the Act 1961, the upkeep and maintenance expenses incurred by the assessee till the maturity of rubber trees are to be allowed. Thus allowed. -6- 7. Both the matters are remitted back to the Assessing Officer for fresh consideration and pass assessment orders after taking into consideration the judgment of the Full Bench rendered in I.T.A. No.201/2013 and connected appeals. Sd/- DINESH KUMAR SINGHJUDGE jjj APPENDIX OF WP(C) 37619/2018 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF ASSESSMENT ORDER DATED 12.3.2014 FOR ASSESSMENT YEAR 2011-12., FOR ASSESSMENT YEAR 2011-12., EXHIBIT P2 TRUE COPY OF ORDER DATED 05.6.2017 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH FOR ASSESSMENT YEAR 2011-12. INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH FOR ASSESSMENT YEAR 2011-12. EXHIBIT P3 TRUE COPY OF APPEAL I.T.A NO.23/2018 DATED 07.11.2017 FILED BY THE PETITIONER BEFORE THIS HONORABLE COURT FOR ASSESSMENT YEAR 2011-12. 07.11.2017 FILED BY THE PETITIONER BEFORE THIS HONORABLE COURT FOR ASSESSMENT YEAR 2011-12. EXHIBIT P4 TRUE COPY OF REVISED ASSESSMENT ORDER DATED 31.3.2016 FOR ASSESSMENT YEAR 2010-11 PASSED BY THE 1ST RESPONDENT. 31.3.2016 FOR ASSESSMENT YEAR 2010-11 PASSED BY THE 1ST RESPONDENT. EXHIBIT P5 TRUE COPY OF ASSESSMENT ORDER DATED 23.3.2015 OF THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1., KOTTAYAM FOR ASSESSMENT YEAR 2012-13. OF THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1., KOTTAYAM FOR ASSESSMENT YEAR 2012-13. EXHIBIT P6 TRUE COPY OF ASSESSMENT ORDER DATED 23.12.2015 OF THE 1ST RESPONDENT FOR ASSESSMENT YEAR 2013-14. OF THE 1ST RESPONDENT FOR ASSESSMENT YEAR 2013-14. EXHIBIT P7 TRUE COPY OF ASSESSMENT ORDER DATED 16.12.2016 OF THE 1ST RESPONDENT FOR ASSESSMENT YEAR 2014-15. OF THE 1ST RESPONDENT FOR ASSESSMENT YEAR 2014-15. EXHIBIT P8 TRUE COPY OF APPELLATE ORDER DATED 03.9.2018 PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT YEAR 2010-11. PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT YEAR 2010-11. EXHIBIT P9 TRUE COPY OF APPELLATE ORDER DATED 25.9.2018 PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT YEAR 2012-13. PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT YEAR 2012-13. EXHIBIT P10 TRUE COPY OF APPELLATE ORDER DATED 25.9.2018 PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT -8- YEAR 2013-14. EXHIBIT P11 TRUE COPY OF APPELLATE ORDER DATED 03.9.2018 PASSED BY THE 2ND RESPONDENT FOR ASSESSMENT YEAR 2014-15. -9- APPENDIX OF WP(C) 32889/2019 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF ASSESSMENT ORDER DATED 12/11/2019 PASSED BY THE RESPONDENT. EXHIBIT P2 TRUE COPY OF NOTICE UNDER SECTION 274 READ WITH SECTION 270A OF THE IT ACT DATED 14/11/2019 PASSED BY THE RESPONDENT.