THE COMMISSIONER OF INCOME TAX-I vs. APPOLO TYRES LTD.,

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ITA/103/2013HC KeralaKLHC01025988201329 July 2021Bench: HONOURABLE MR.JUSTICE S.V.BHATTI,HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court decided to consider only questions 3 and 4, which pertained to whether DG Power Generation Units I and II constituted an 'undertaking' under Section 80-IA and whether they were entitled to the benefits of that section. The Court noted that these questions were identical to those raised by the Revenue in ITA Nos. 69/2011 and 70/2011 for Assessment Year 2002-03. The Revenue's appeals in those cases were dismissed on February 27, 2019. By following the reasoning and conclusions of this Court in the aforementioned prior judgments, the substantial questions of law (questions 3 and 4) were answered in favour of the assessee and against the Revenue. The appeal was dismissed. No order as to costs was made. Questions 1 and 2 were not decided as they were not pressed.

What were the facts?

The Commissioner of Income Tax (Revenue) filed an appeal against an order of the Income Tax Appellate Tribunal (Tribunal), Cochin Bench, dated August 24, 2012. The appeal pertains to Assessment Year 2003-04 and concerns M/s. Apollo Tyres Ltd. (Assessee). The Tribunal's order was challenged on several grounds. However, during the hearing, only questions related to Section 80-IA of the Income Tax Act were pressed. The Revenue noted that these questions were similar to those raised in previous appeals (ITA Nos. 69/2011 and 70/2011) for Assessment Year 2002-03, which were dismissed by the High Court on February 27, 2019. The High Court was asked to consider the reasoning and conclusions from those prior judgments.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, in light of Section 43B, the Tribunal was correct in allowing a deduction for bonus claimed and paid in Assessment Year 2002-03 for Assessment Year 2003-04? 2. Whether the Tribunal was correct in allowing a claim of Rs. 2,32,93,575/- as current expenses under Section 37 for acquisition of revenue items? 3. Whether the Tribunal was correct in holding that DG Power Generation Units I and II constituted an 'undertaking' under Section 80-IA? 4. Whether DG Power Generation Units I and II are entitled to the benefit of Section 80-IA? Assessee's Contentions: The judgment does not explicitly record the assessee's arguments. However, by pressing for the allowance of the claims, it is implied the assessee supported the Tribunal's findings. Revenue's Contentions: The Revenue challenged the Tribunal's decisions on all four questions. Specifically, they argued against the allowance of bonus deduction, the classification of expenses under Section 37, and the eligibility of DG Power Generation Units for the 'undertaking' status and benefits under Section 80-IA. The Revenue relied on the grounds stated in the appeal memorandum.

Which sections of the Income-tax Act were involved?

Section 43B,Section 37,Section 80-IA

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 29TH DAY OF JULY 2021 / 7TH SRAVANA, 1943 ITA NO. 103 OF 2013 AGAINST THE ORDER IN ITA 378/2009 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: THE COMMISSIONER OF INCOME TAX-I COCHIN. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT/S: APOLLO TYRES LTD., 6TH FLOOR, CHERUPUZHPAM BUILDING, SHANMUGHAM ROAD, KOCHI-682031. BY ADVS. SRI.V.ABRAHAM MARKOS SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN SRI.BINU MATHEW SRI.JOSEPH MARKOSE SR. SRI.TOM THOMAS KAKKUZHIYIL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 29.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.103/2013 -2- J U D G M E N T S.V.Bhatti, J. Heard learned Standing Counsel Mr. Christopher Abraham and learned Senior Counsel Mr. Joseph Markos for parties. 2. The Commissioner of Income Tax/Revenue is the appellant. M/s.Apollo Tyres Ltd., Kochi/Assessee is the respondent. The subject appeal is at the instance of Revenue from the order of Income Tax Appellate Tribunal (for short ‘the Tribunal'), Cochin Bench in ITA No.378/Coch/2009 dated 24.08.2012. The appeal deals with the Assessment Year 2003-04. The following substantial questions of law are stated for consideration in this appeal: “1. Whether, on the facts and in the circumstances of the case and also in the light of /Section 43B of the IncomeTax Act, the Tribunal is right in allowing the deduction for the bonus in

I.T.A. No.103/2013 -3- the Asst. Year 2003-04 claimable and paid in the Assessment Year 2002-03? 2. Whether, on the facts and in the circumstances of the case and for the reasons stated in the grounds, the Tribunal is right in law allowing the claim of Rs. 2,32,93,575/- stating that it was spent for acquisition of revenue items and is allowable under Section 37 of the Act as current expenses? 3. Whether, on the facts and in the circumstances of the case the Tribunal is right in law and fact in holding that DG Power Generation Units 1 and II constituted an "undertaking" under Sec. 80 IA of the Income tax Act? 4. Whether DG Power Generation units 1 and II are entitled to the benefit of Sec. 80 1A of the Income tax Act? 3. At the hearing of appeal, question nos.3 and 4 alone are pressed for consideration. It is also stated, as a matter of fact, that the questions raised in this appeal, namely question nos. 3 and 4 are similar to the questions raised by the Revenue in ITA No. 69/2011 and ITA No.70/2011 for the Assessment Year 2002-03. On 27.02.2019 the appeals filed by the Revenue were

I.T.A. No.103/2013 -4- dismissed. Our attention has been drawn to the reasoning and conclusion recorded by this Court on similar questions framed in ITA Nos.69 and 70 of 2011. By following the reasoning and conclusion recorded in ITA Nos.69 and 70/2011, the substantial questions of law raised as question nos.3 and 4 are answered in favour of the assessee and against the Revenue. The appeal is dismissed. No order as to costs. Sd/- S.V.BHATTI JUDGE Sd/- BECHU KURIAN THOMAS JUDGE jjj

I.T.A. No.103/2013 -5- APPENDIX OF ITA 103/2013 PETITIONER ANNEXURE ANNEXURE A COPY OF THE ASSESSMENT ORDER U/S.143(3) PASSED BY THE ASSESSING OFFICER ON 27.3.2006 FOR AY 2003- 04. ANNEXURE B COPY OF THE ASSESSMENT ORDER U/S.143(3) R.W.S. 147 DATED 12.12.2008. ANNEXURE C COPY OF CIT (A)'S ORDER DATED 25.4.2006. ANNEXURE D COPY OF CIT THE (A)'S ORDER DATED 30.3.2009. ANNEXURE E ORDER OF THE ITAT, IN ITA NO.430/COCH/2006 & 378/COCH/2009 DATED 24.8.2012.

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