THE COMMISSIONER OF INCOME-TAX, TVM. vs. M/S.SURYA SAMUDRA HOLIDAY RESORTS(P)LTD.

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ITA/121/2008HC KeralaKLHC01027026200819 February 2009Author: HONOURABLE MR.JUSTICE K.SURENDRA MOHAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Revenue's appeal. The Court reasoned that the Revenue could only succeed if it could demonstrate that the VDIS amount was not included in the total income of the previous year. However, the original assessment had already included the VDI amount in the computation of tax liability, and the department had accepted this position. Therefore, there was no basis for excluding the VDI amount when computing the relief under Section 80 HHD. The Court found no scope for the Revenue's argument to exclude the VDI amount. The operative direction was to dismiss the Revenue's appeal.

What were the facts?

The appeal concerns the assessment year 1996-97. The respondent-assessee, M/s. Surya Samudra Holiday Resorts (P) Ltd., made a declaration under the Voluntary Disclosure of Income Scheme (VDIS). In the initial assessment, relief under Section 80 HHD of the Income Tax Act was granted, including the VDI amount of Rs. 40,13,000/- in the gross income. Subsequently, the Assessing Officer (AO) invoked Section 147 and recalculated the Section 80 HHD relief by excluding Rs. 14.13 lakhs of the VDI amount from the gross total income. The Commissioner of Income Tax (Appeals) reversed the AO's order, and the Income Tax Appellate Tribunal (ITAT) confirmed this decision. The Revenue (Commissioner of Income Tax) has filed this appeal against the ITAT's order.

What were the issues?

1. Whether the Tribunal was correct in holding that the Voluntary Disclosure of Income Scheme (VDIS) amount should be included in the gross total income for the purpose of computing relief under Section 80 HHD of the Income Tax Act, despite the AO's subsequent exclusion under Section 147. Assessee's Contentions: The assessee argued that the VDI amount was included in the original assessment for calculating relief under Section 80 HHD. The AO's subsequent exclusion under Section 147 was incorrect as the department had already accepted the inclusion in the initial assessment. The Revenue's appeal should fail if it cannot demonstrate that the VDIS amount was not included in the total income of the previous year. Revenue's Contentions: The Revenue contended that the VDI amount should be excluded from the gross total income when computing relief under Section 80 HHD, as indicated by the AO's action under Section 147.

Which sections of the Income-tax Act were involved?

Section 80 HHD,Section 147,Section 68

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 C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN THURSDAY, THE 19TH FEBRUARY 2009 / 30TH MAGHA 1930 ITA.No. 121 of 2008() --------------------- ITA.48/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT ------------------------- M/S. SURYA SAMUDRA HOLIDAY RESORTS (P) LTD., THIRUVANANTHAPURAM. ADV. SRI.P.BALAKRISHNAN (E) FOR R1 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... I.T. Appeal No.121 of 2008 .................................................................... Dated this the 19th day of February, 2009.

JUDGMENT Ramachandran Nair, J. The question raised pertains to computation of relief under Section 80 HHD of the Income Tax Act. The issue arose for the assessment year 1996-97. During the year respondent-assessee made declaration under the Voluntary Disclosure of Income Scheme. In fact, in the first assessment it is seen that tax is demanded after excluding the declared income in terms of Section 68 of the Finance Act, 1997. Relief under Section 80 HHD was also granted by reckoning the VDI amount of Rs.40,13,000/- also as part of the gross income. However, later the Assessing Officer invoked powers under Section 147 and reworked relief under Section 80 HHD by excluding VDI amount of Rs.14.13 lakhs from the gross total income. The first appellate authority reversed this and the Tribunal confirmed it. It is against this order the Revenue has filed the appeal. We have heard Senior Standing Counsel for the appellant and Adv. Sri.P.Balakrishnan appearing for 2 the respondent.

2.

Revenue can succeed only if it is shown that the amount covered by the VDIS was not included in the total income of the previous year. On the other hand, in the original assessment itself the Assessing Officer has excluded the VDIS amount in the computation of tax liability. In other words, the department has accepted the position that the VDIS amount is not included in the total gross income and so much so, there is no scope for excluding the same while computing relief under Section 80 HHD. We, therefore, dismiss the department's appeal.

C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms

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