KERALA STATE BEVERAGES (M&M) CORPORATION LTD. vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1)

WA/437/2014HC KeralaKLHC01044043201414 March 2014Author: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR4 pages
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What were the facts?

The appellant, M/s. Kerala State Beverages (M&M) Corporation Ltd., is challenging an order in Writ Appeal No. 437 of 2014 concerning assessment years 2009-2010 and 2010-2011, and Writ Appeal No. 438 of 2014 for assessment year 2011-2012. The core dispute revolves around whether surcharge paid under the Kerala Surcharge on Taxes Act, 1957, and turnover tax paid under the Kerala General Sales Tax Act, 1963, are deductible from total income under Section 37 of the Income Tax Act. The assessing authority held the appellant liable to pay these taxes. The matter was pending before appellate authorities. A learned single judge directed the appellant to satisfy 40% of the outstanding liability pending the appellate decisions.

What did the High Court hold?

The High Court, considering the amount involved and the impending impact of a new provision effective from April 1, 2014, modified the single judge's order. The Court directed the appellant to deposit 10% of the outstanding liability to obtain an interim order of stay during the pendency of the appeals before the concerned appellate authorities. This deposit was to be made on or before March 31st. Furthermore, the Court directed the appellate authorities to dispose of the appeals on merits within three months from the date of the order. The specific finding on the deductibility of surcharge and turnover tax was left to the appellate authorities.

What were the issues?

1. Whether surcharge paid under the Kerala Surcharge on Taxes Act, 1957, and turnover tax paid under the Kerala General Sales Tax Act, 1963, are deductible from total income as per Section 37 of the Income Tax Act, 1961, while computing taxable income? (Question of law) Assessee's Contention: The appellant argued that in the absence of certainty regarding their liability to pay these taxes, being compelled to pay 40% of the outstanding liability as directed by the single judge would impose a significant and uncomfortable burden, especially as the ultimate liability might be found to be non-existent. The appellant did not explicitly rely on any specific authorities or precedents in this regard in the provided text. Revenue's Contention: The revenue's arguments are not explicitly recorded in the provided text. However, their position is implied by the assessing authority's opinion that the appellant is liable to pay these taxes.

Which sections of the Income-tax Act were involved?

Section 37,Section 40(ii)(b)

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Heard together (2 matters)

WA.No. 437 of 2014
W.A. NO. 438 OF 2014

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY, THE 14TH DAY OF MARCH 2014/23RD PHALGUNA, 1935 WA.No. 437 of 2014 () ----------------------------- AGAINST THE JUDGMENT DATED 25-02-2014 IN WP(C).NO. 5406/2014. ...... APPELLANT/APPELLANT: -------------------------------------- M/S.KERALA STATE BEVERAGES (M&M) CORPORATION LTD., P.B. 2263, SASTHAKRIPA OFFICE COMPLEX, SASTHAMANGALAM, THIRUVANANTHAPURAM. BY ADVS.SRI.ANIL D. NAIR, SRI. SREEJITH R.NAIR, SRI. SULEKHA BEEVI C.S., SRI. ROSIE ATHULYA JOSEPH. RESPONDENTS/RESPONDENTS: ------------------------------------------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TRIVANDRUM - 695 001. 2. THE INCOME TAX APPELLATE TRIBUNAL, COCHIN -682 018. BY SRI.P.K.R. MENON, SENIOR SC. ADV. SRI.JOSE JOSEPH, SC, INCOME TAX. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14-03-2014, ALONG WITH W.A. NO. 438 OF 2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs.

MANJULA CHELLUR, C.J & A.M.SHAFFIQUE, J. --

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