COMMISSIONER OF INCOME TAX vs. HARRISONS MALAYALAM LTD.

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ITA/138/2001HC KeralaKLHC01019108200103 August 2012Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the appeal filed by the revenue. The Court followed a Full Bench decision of the Kerala High Court in the case of Parry Agro Industries Ltd. Vs. CIT [(2006) 285 ITR 440 (Ker) (FB)]. Based on this precedent, the Court held that income from other sources, such as interest income, subsidies, and sale of old trees, cannot be considered as "profits of eligible business or profession" for the purpose of deduction under Section 32AB of the Income Tax Act, 1961. Consequently, the orders of the appellate authorities (CIT(A) and ITAT) were set aside, and the orders of the assessing authority were restored. The operative direction was to allow the appeal and restore the assessing officer's orders.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Cochin (revenue) against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, for the assessment year 1990-91. The dispute concerned the deduction under Section 32AB of the Income Tax Act, 1961. The ITAT had ruled in favour of the assessee, M/s. Harrisons Malayalam Ltd. This issue had also arisen in two previous assessment years for the same assessee, which were decided by the High Court. The revenue challenged the ITAT's order which had set aside the orders of the assessing officer and the Commissioner of Income Tax (Appeals).

What were the issues?

1. Whether income from other sources, such as interest income from investments, re-planting subsidy, and sale of old and unyielding trees, could be considered as "profits of eligible business or profession" entitled to deduction from total income under the head "profits and gains of business or profession" (Section 32AB of the Income Tax Act, 1961)? 2. Can such profits be held to be computed in accordance with the requirements of Schedule II of the Companies Act? Assessee's Contentions: The judgment does not record specific contentions made by the assessee. The High Court's decision indicates it followed a previous Full Bench ruling. Revenue's Contentions: The revenue argued that income from other sources should not be considered as profits of eligible business or profession for the purpose of Section 32AB deduction. They also contended that the computation of profits must adhere to Schedule II of the Companies Act.

Which sections of the Income-tax Act were involved?

Section 32AB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN FRIDAY, THE 3RD DAY OF AUGUST 2012/12TH SRAVANA 1934 ITA.No. 138 of 2001 ( ) ----------------------- ITA.18/COCH/1993 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH. .................. APPELLANT(S): ----------------------- THE COMMISSIONER OF INCOME TAX, COCHIN.

BY SRI.P.K.R.MENON, SENIOR COUNCIL, SC, IT. ADV. SRI.JOSE JOSEPH, SC, IT. RESPONDENT(S): -------------------------- M/S. HARRISONS MALAYALAM LTD., WELLINGTON ISLAND, COCHIN-3.

BY SRI.A.K.JAYASANKAR NAMBIAR, SENIOR ADVOCATE. BY ADV. SRI.ANIL D. NAIR. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 03-08-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs.

ITA.No. 138 of 2001 APPENDIX PETITIONER'S ANNEXURES:- ANNEXURE A COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 31/12/1991. ANNEXURE B COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), DATED 23/10/1992. ANNEXURE C COPY OF THE ORDER OF THE TRIBUNAL DATED 16/02/2001. RESPONDENT'S ANNEXURES:- NIL. //TRUE COPY// P.S. TO JUDGE rs.

THOTTATHIL B. RADHAKRISHNAN & K.VINOD CHANDRAN, JJ. --------------------------------------------- I.T.A.No.138 of 2001 --------------------------------------------- Dated this the 3rd day of August, 2012 JUDGMENT Vinod Chandran, J. The above appeal is filed by the revenue against the order of the Tribunal for the assessment year 1990-'91 raising the question of deduction under Section 32AB of the Income Tax Act, 1961. The very same issue arose for the assessee in the two previous assessment years which was decided by us in ITA Nos.129/2001 and 98/2002 by judgment dt. 24.7.2012. 2. Though various questions were raised in the appeal, as in the previous year we re-frame the question of law arising from the order of the Tribunal as follows: “Whether on the facts and in the circumstances of the case income from other sources, like interest income from investments, re-planting subsidy, sale of old and unyielding trees, etc. could be considered to be “profits of eligible business or profession” entitled to deduction from the total income chargeable to tax under the head “profits and gains of business or profession”; when such income of an assessee is chargeable to tax and can such profits held to be computed in accordance with the requirements of Schedule II of the Companies Act ?”

ITA.No. 138/01 -2- The said question was answered by us following a Full Bench decision of this court where the very same issue was considered. Hence following the said decision reported in Parry Agro Industries Ltd. Vs. CIT [(2006) 285 ITR 440 (Ker) (FB)] we allow this appeal and restore the orders of the assessing authority setting aside the orders of both the appellate authorities. THOTTATHIL B. RADHAKRISHNAN, JUDGE. K.VINOD CHANDRAN, JUDGE. okb.

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