THE COMMISSIONER OF INCOME TAX,COCHIN vs. KISHORE KUMAR SHAMJI,COCHIN

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ITA/834/2009HC KeralaKLHC01025595200909 November 2018Author: HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON,HONOURABLE MR.JUSTICE N.ANIL KUMAR21 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeals did not involve any substantial question of law, but rather revolved around questions of fact. The Court noted that the Tribunal's finding that availing loans from banks and giving advances to M/s. Spot Spices Co. were an integral part of the assessee's export business was well-based and within the bounds of law. The Court reasoned that the assessee's arrangement with the associate concern to procure pepper was for business expediency, ensuring immediate access to materials after obtaining export orders, which is crucial for an exporter. The Court cited Bombay High Court in 74-ITR-723 and Gujarat High Court in 178-CTR-65, stating that borrowed funds could be applied for business purposes, including interest-free advances to suppliers. Therefore, the assessing officer's estimation of interest against these advances was unjustified. The Court concluded that the matter remained a question of fact, not warranting interference under Section 260A of the Income Tax Act, and accordingly dismissed the appeals.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (Revenue) against the orders of the Income Tax Appellate Tribunal (Tribunal) concerning the assessee, Kishor Kumar Shamji, proprietor of Kishor Spices Company. The assessment years involved range from 1996-97 to 2001-02. For assessment year 1996-97, the assessment order was challenged in ITA No. 297/2009. For assessment years 1997-98 to 2001-02, common orders of the Tribunal were challenged in other appeals. The assessee, engaged in export of hill produces like pepper and ginger, had a sister concern, 'Spot Spices Company', run by his wife, which procured materials for export. The assessee borrowed loans and advanced part of these funds to the sister concern for procurement and storage. The assessee's practice was to record these transactions only after obtaining export orders.

What were the issues?

The Tribunal had to decide the following substantial questions of law suggested by the Revenue: 1. Whether the Tribunal was correct in observing that availing loans from banks and giving advances to M/s. Spot Spices Co. were an integral part of the assessee's export business, and if this finding was unsupported by material, being based solely on counsel's submission. 2. Whether the Tribunal was correct in holding that the estimation of interest by the assessing officer and subsequent exclusion of 90% for Section 80HHC benefit were not called for, and if this finding was unsupported by materials and based on the Tribunal's ipse dixit. 3. Whether the finding challenged in the second question was equally fallacious and perverse if the finding in the first question was perverse. 4. Whether the Tribunal was correct in confirming the CIT(A)'s order on the impugned issue. The Revenue argued that the Tribunal's findings were unsupported by material and based on submissions or ipse dixit. The assessee's contentions are not explicitly recorded in the provided text, but the Tribunal's reasoning suggests the assessee argued that the advances to the sister concern were for business expediency and integral to the export business, supported by case law.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 260A,Section 143(3),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, by way of

U/S.143(3) DTD.27.10.98 FOR THE A.Y. 1996-97 ISSUED BY THE ASSESSING OFFICER. ANNEXURE B COPY OF THE ORDER DTD.7.4.99 OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOCHI. ANNEXURE C COPY OF THE ORDER DTD.8.5.2003 OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA.

Nos.341 & 362 (Coch)/99 A.Ys.1996-97 & 1995-96. APPENDIX IN I.T.A.No.787/2009 PETITIONER’S ANNEXURE: ANNEXURE A COPY OF ORDER U/S.154 OF THE INCOME TAX ACT DTD.25.3.2003 FOR THE ASSESSMENT YEAR 2001-02. ANNEXURE B COPY OF THE ORDER DTD.12.9.2003 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.1.7.2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA.105/Coch/04. APPENDIX IN I.T.A.No.834/2009 PETITIONER’S ANNEXURE: ANNEXURE A COPY OF ORDER U/S.143(3) OF THE INCOME TAX ACT DTD.9.1.2002 FOR THE ASSESSMENT YEAR 1999-2000. ANNEXURE B COPY OF THE ORDER DTD.12.9.2003 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.1.7.2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA.103/Coch/04. I.T.A.Nos.297,787,834, 859, 1185 & 1189/2009 ..21.. APPENDIX IN I.T.A.No.859/2009 PETITIONER’S ANNEXURE: ANNEXURE A COPY OF ORDER U/S.143(3) OF THE INCOME TAX ACT DTD.9.1.2002 FOR THE ASSESSMENT YEAR 2000-01. ANNEXURE B COPY OF THE ORDER DTD.12.9.2003 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.1.7.2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA.104/Coch/04. APPENDIX IN I.T.A.No.1185/2009 PETITIONER’S ANNEXURE: ANNEXURE A COPY OF ORDER U/S.143(3) OF THE INCOME TAX ACT DTD.7.11.2000 FOR THE ASSESSMENT YEAR 1998-99. ANNEXURE B COPY OF THE ORDER DTD.12.9.2003 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.1.7.2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA.102/Coch/04. APPENDIX IN I.T.A.No.1189/2009 PETITIONER’S ANNEXURE: ANNEXURE A COPY OF ORDER U/S.143(3) OF THE INCOME TAX ACT DTD.24.11.2000 FOR THE ASSESSMENT YEAR 1997-98. ANNEXURE B COPY OF THE ORDER DTD.12.9.2003 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.1.7.2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA.101/Coch/04.

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