M/S APOLLO TYRES LTD. vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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ITA/274/2013HC KeralaKLHC01026159201330 July 2021Author: HONOURABLE MR.JUSTICE S.V.BHATTI,HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law were answered in favour of the Revenue and against the Assessee. The Court adopted the reasoning from its earlier order in ITA No. 26/2013, which had dismissed the assessee's appeal for Assessment Year 2003-04 on similar grounds. Consequently, the appeal filed by M/s. Apollo Tyres Ltd. was dismissed. The disallowance of part depreciation on the Gurgaon building and the issue concerning club expenses were thus upheld in favour of the Revenue. No specific findings were detailed for each question in this judgment, but the overall dismissal indicates the Tribunal's decision on these matters was sustained. The operative direction was the dismissal of the appeal.

What were the facts?

M/s. Apollo Tyres Ltd. (the assessee) filed an appeal before the High Court of Kerala against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal pertains to Assessment Year 2006-07 and challenges the disallowance of expenditure towards club expenses and a portion of depreciation on the Gurgaon building. The ITAT's order, dated May 29, 2013, is under challenge. The High Court noted that a similar appeal filed by the assessee for Assessment Year 2003-04 (ITA No. 26/2013) was dismissed, and the reasoning from that dismissal would be adopted for the present appeal.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was justified in sustaining the disallowance of part depreciation of the Gurgaon office building, amounting to ₹18,93,581, in relation to the portion let out to Apollo International Ltd. (Section 32 of the Income Tax Act, 1961). 2. Whether the Tribunal was justified in sustaining the disallowance of part depreciation, ignoring the concept of a block of assets where individual items are not to be considered separately for depreciation (Section 32). 3. Whether the Tribunal was justified in restoring the issue of deduction of club expenses of ₹50,09,299 to the Assessing Officer (AO) for fresh determination, in light of its order for Assessment Year 2005-06. Assessee's contentions: The assessee argued that the disallowance of depreciation on the Gurgaon building was incorrect, particularly in light of the block of assets concept. Regarding club expenses, the assessee sought a fresh determination by the AO based on prior year's orders. Revenue's contentions: The revenue contended that the disallowance of depreciation was justified. No specific contentions for the club expenses were recorded.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 30TH DAY OF JULY 2021 / 8TH SRAVANA, 1943 ITA NO. 274 OF 2013 AGAINST THE ORDER IN ITA 74/2010 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: M/S APOLLO TYRES LTD. 6TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI - 31. (PAN NO:AAACA6990Q) BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN SRI.BINU MATHEW SRI.TOM THOMAS KAKKUZHIYIL RESPONDENT/S: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1), RANGE 0 1, KOCHI - 682 018. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 30.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. No.274/2013 -2-

J U D G M E N T S.V.Bhatti, J. Heard learned Senior Counsel Mr. Joseph Markos and learned Standing Counsel Mr. Christopher Abraham for parties.

2.

M/s.Apollo Tyres Ltd., Kochi/Assessee is the appellant. The Deputy Commissioner of Income Tax/Revenue is the respondent. The subject appeal is at the instance of Assessee from the order of Income Tax Appellate Tribunal (for short ‘the Tribunal') Cochin Bench in ITA No.74/Coch/2010 dated 29.05.2013. The controversies relate to the Assessment Year 2006-07. The appeal deals with the questions of disallowance made by the Tribunal of the expenditure incurred by the assessee towards club expenses and disallowance of part of depreciation of Gurgaon building.

-3-

2.

1 The substantial questions read as follows:

“1. Whether on the facts and in the circumstances of the case the Tribunal is justified in law and on facts in sustaining the disallowance of part depreciation of Gurgaon office building aggregating to 18,93,581/- in relation to let out portion to Apollo International Ltd.

2.

Whether on the facts and in the circumstances of the case. the Tribunal is justified in law and on facts in sustaining the disallowance of part depreciation ignoring the fact that concept of block of assets had been inserted in the Act and individual items included in the block are not to be considered separately for the purposes of granting depreciation.

3.

Whether on the facts and in the circumstances of the case the Tribunal is justified in law and on facts in restoring the issue of deduction of club expenses of 50,09,299/- to the AO for fresh ₹ determination in the light of its order for assessment year 2005-06.”

3.

The assessee, raising similar questions of law, filed ITA No.26/2013 for the Assessment Year 2003-04. By a separate order the appeal has been dismissed. The reasons stated in ITA No.26/2013 are adopted while considering and disposing of the -4- substantial questions framed in this appeal as well. Hence, the questions are answered in favour of the Revenue and against the assessee. Appeal fails, dismissed accordingly. No order as to costs. S.V.BHATTI JUDGE BECHU KURIAN THOMAS JUDGE jjj -5-

Appendix — schedule of exhibits
APPENDIX OF ITA 274/2013 PETITIONER ANNEXURE ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED 19/12/2008 OF THE 1ST RESPONDENT. ANNEXURE B TRUE COPY OF THE APPELLATE ORDER DATED 30/11/2009 OF THE COMMISSIONER OF INCOME TAX (APPEALS)II, KOCHI. ANNEXURE C TRUE COPY OF THE IMPUGNED ORDER DATED 29/05/2013 OF THE INCOME TAX APPELLATE TRIBUNAL, KOCHI BENCH.

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