THE COMMISSIONER OF INCOME TAX, COCHIN vs. M/S.APPOLLO TYRES LTD., KOCHI

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ITA/59/2010HC KeralaKLHC01026751201012 February 2019Author: HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON,HONOURABLE MR.JUSTICE N.ANIL KUMAR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first question of law raised by the Revenue was suffering from a material defect and had been framed wrongly. The Revenue's counsel fairly submitted that this question was not pressed. Regarding the second question, the Court noted that the Apex Court had declared the law in favour of the assessee and against the Revenue in the cases of Commissioner of Income Tax, Delhi vs. Woodward Governor India P.Ltd and Oil and Natural Gas Corporation Ltd, Dehradun vs. Commissioner of Income Tax, Dehradun. The Revenue's counsel conceded this position. Since no other issue survived for consideration, the appeal was held to be devoid of merit and was dismissed.

What were the facts?

The Revenue is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated August 18, 2009. Initially, the appeal was filed challenging the assessment year 1997-98, but an application was later filed to amend this to assessment year 1996-97, which was allowed. The assessee, M/s. Appollo Tyres Ltd., filed returns showing total income, followed by a revised return. The assessment for AY 1996-97 was completed, and the assessee appealed to the Commissioner of Income Tax (Appeals), who granted some relief. Both the assessee and Revenue filed appeals before the ITAT, which passed the impugned order. The Revenue has proposed two substantial questions of law.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal should not have confirmed the disallowance of Rs.15,00,000/-, as the assessee agreed to it, and whether the ITAT's finding in paragraph 38 is misleading and incorrect due to incorrect usage of English. 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim a deduction of Rs.11,31,385/- due to foreign exchange fluctuation, when Section 43A of the Income Tax Act provides for adjustment of the actual cost of a capital asset only upon settlement of the liability, i.e., on actual payment. Assessee's arguments: Not recorded. Revenue's arguments: For issue 1, the Revenue argued that the Tribunal's finding was misleading and incorrect. For issue 2, the Revenue contended that deduction for foreign exchange fluctuation should not be allowed as per Section 43A until actual payment of the liability.

Which sections of the Income-tax Act were involved?

Section 43A

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 P.R.RAMACHANDRA MENON & THE HONOURABLE MR.JUSTICE N.ANIL KUMAR TUESDAY ,THE 12TH DAY OF FEBRUARY 2019 / 23RD MAGHA, 1940 ITA.No. 59 of 2010 AGAINST THE ORDER IN ITA 84/2001 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 18-08-2009 APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX, COCHIN COCHIN. BY ADV. SRI.CHRISTOPHER ABRAHAM, SC, FOR INCOME TAX BY ADV. SHRI JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: M/S.APPOLLO TYRES LTD., KOCHI 6TH FLOOR, CHERUPUSHPAM BUILDINGS,, SHANMUGHAM ROAD, KOCHI-31. BY ADV.SHRI JOSEPH MARKOSE (SR.) SRI.BINU MATHEW SRI.B.J.JOHN PRAKASH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 59 of 2010 2

JUDGMENT P.R. Ramachandra Menon, J. This Appeal is at the instance of the Revenue. The challenge is against the order passed by the Income Tax Appellate Tribunal.

2.

At the very outset, it is to be noted that the appeal has been filed challenging the assessment proceedings of the assessment year 1997-98 (as pleaded) producing copies of the assessment order and appellate order of the Commissioner as Annexures A & B respectively. Later in the year 2016, I.A.2113 of 2016 was filed seeking to substitute Annexures A&B orders by Annexures A1 and B1 pointing out that the actual dispute is in respect of the assessment year 1996-97 and not 1997-98. The said I.A. was allowed, but the pleading in the Appeal stand unamended.

3.

The sequence of events reveals that the assessee, who is engaged in the manufacture and sale of Automobile Tyres and Tubes filed returns showing the total income as Rs.5,08,87,089/-, which however was followed by the Revised return on 30.11.1998. This was processed by the Department and the assessment was completed in respect of the Assessment year 1996-97, as per Annexure A1 order dated 30.03.1999. Aggrieved by the assessment, the assessee moved the Commissioner of Income Tax (Appeals) wherein interference was made as per Annexure B1 order with regard to some aspects; whereby the additions under some Heads were justified. The assessee as well as the Revenue, to the extent they were aggrieved, filed separate appeals before the Income Tax Appellate Tribunal. The matter was considered elaborately and it was finalised as per Annexure C order dated 18.08.2009, which in turn is under challenge at the instance of the Revenue in this appeal.

4.

The Revenue has suggested some questions as involving substantial questions of law in the following terms:

“1. Whether, on the facts and in the circumstances of the case should not the Tribunal have confirmed the disallowance of Rs.15,00,000/- since the assessee agree to the same and is not the finding in paragraph 38 of the ITAT's order misleading and incorrect and the result of incorrect usage of English language?

2.

Whether, on the facts and in the circumstances of the case and when Section 43A of the I.T.Act provides for adjustment of actual cost of capital asset only on settlement of the liability, that is, on actual payment, the assessee is entitled to claim the deduction of Rs.11,31,385/- due to foreign exchange fluctuation?”

5.

When the matter came up for consideration before this Court on 27.09.2010, notice on admission was ordered. The fact remains that the matter is still to be admitted and no substantial question of law has been framed by this Court.

6.

Heard Mr. Christopher Abraham, the learned Standing Counsel for the Income Tax Department and Mr. Joseph Markose, the learned Sr.Counsel appearing for the assessee.

7.

During the course of hearing, with reference to the materials on record, the learned Standing Counsel fairly submits that the first question raised is suffering from some material defect and that the same has been framed wrongly; also adding that the said Governor India P.Ltd [312 ITR 254 (SC) and Oil and Natural Gas Corporation Ltd, Dehradun, through Managing Director vs. Commissioner of Income Tax, Dehradun. [322 ITR 180 (SC)]. The position in this regard is conceded by the learned Standing Counsel for the Department as well. In the above circumstance, since no other issue does survive for consideration of this Court in this appeal, it is held that the appeal is devoid of any merit and it stands dismissed accordingly. P.R. RAMACHANDRA MENON, JUDGE N. ANIL KUMAR, lk JUDGE

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