THE COMMISSIONER OF INCOME TAX, COCHIN vs. APOLLO TYRES LTD., CHERUPUZHPAM BUILDING

Facts

These appeals concern assessment year 1993-94 for M/s. Appollo Tyres Ltd. The assessee filed a return, later revised. The Assessing Officer completed assessment under Section 143(3), which was partly allowed by the CIT(Appeals). Subsequently, the assessment was re-opened under Section 147, leading to a higher total income. The CIT(Appeals) dismissed the assessee's appeal against the re-opened assessment. Both the assessee and the Department appealed to the ITAT. The ITAT passed a common order, largely favoring the assessee, except on one aspect. This led to appeals by the Department and the assessee to the High Court. The High Court noted that no substantial question of law was framed.

Held

The High Court held that the appeals preferred by both the Revenue and the assessee do not involve any substantial question of law within the purview of Section 260A of the Income Tax Act. Consequently, the appeals were dismissed. The Court also referenced the CBDT's Litigation Policy Circular No. 3/2018, which sets monetary limits for filing appeals, and noted that pending appeals below specified tax limits could be withdrawn or not pressed. The Court cited a Supreme Court decision where appeals with tax effect less than Rs. one Crore were dismissed based on the CBDT circular. The specific findings of the Tribunal on the allowability of the professional fee and the nature of roll over charges were not directly addressed by the High Court in its final decision, as the appeals were dismissed on the ground of lacking a substantial question of law.

Key Issues

1. Whether the professional fee of Rs.56.50 lakhs paid for a 'rights issue' of non-convertible debentures, billed on March 10, 1993, is allowable as an expenditure for assessment year 1993-94, even though the 'rights issue' closed in assessment year 1992-93? The Assessee contended that since the bill was raised within the assessment year 1993-94, it is allowable. The Revenue contended it relates to the preceding assessment year. 2. Whether roll over charges of Rs.2,30,67,615/- for renewal of forward contracts for loan repayment should be treated as capital expenditure, as held by the Tribunal based on a Special Bench decision, or as revenue expenditure as initially allowed by the Assessing Officer? The Revenue argued it should be capital expenditure, while the Assessee's stand, as reflected in the Assessing Officer's initial allowance, was that it was revenue expenditure.