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

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON & THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 10TH DAY OF APRIL 2019 / 20TH CHAITHRA, 1941 ITA.No. 255 of 2010 AGAINST THE ORDER IN MP No145/Coch/2009 DATED 8.1.2010 IN ITA 25/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 08-01-2010 APPELLANT: THE COMMISSIONER OF INCOME TAX COCHIN. BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENTS: M/S.APPOLO TYRES LTD,KOCHI 6TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, KOCHI-31. BY ADVS. SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.GOVIND VIJAYAKUMARAN NAIR SRI.HARAN THOMAS GEORGE SRI.ISAAC THOMAS SRI.NOBY THOMAS CYRIAC THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10.04.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No.255 of 2010 2 JUDGMENT Bhatti, J. Heard the learned Standing Counsel, Mr.Christopher Abraham, for the appellant and the learned senior counsel, Mr.Joseph Markose, for the respondent. 2. In this appeal, the Revenue assails the order of the Income Tax Appellate Tribunal, Cochin Bench in M.P.No.145/coch/2009 dated 18.8.2009 in Tax Appeal No.25 of 2004. The admitted circumstances leading to the filing of the instant Tax Appeal could be summarily stated as follows: 3. The subject matter of M.P.No.145/coch/2009 is the order for assessment year 1998-1999. The respondent/assessee filed ITA Nos.43/coch/2001 and 21 to 24/coch/2005 for the assessment years 1996-1997 and 1997-1998. The assessee filed ITA Nos.538/coch/05, ITA No.273/coch/05 and ITA No.25/coch/04. These three appeals are dealing with the assessment years 1999-2000 and 1998-1999. The Income Tax Appellate Tribunal through common order dated 18.8.2009 allowed in part ITA No.43/coch/01, ITA Nos.21 to

ITA No.255 of 2010 3 24/coch/05 were allowed and the appeals filed by the revenue were dismissed. The Tribunal through the common order dated 9.9.2009 disposed of ITA Nos.538/coch/05, ITA No.273/coch/05 and ITA No.25/coch/2005. The result noted as per the order dated 9.9.2009 in CTA No.25/coch/05 is that the appeal is allowed in part. The assessee filed MP No.145/coch/2009 for correction or rectification of a few inadvertant omissions noted by the assessee, in the order dated 9.9.2009 in ITA No.25/2004. The case of assessee is that the Income Tax Appellate Tribunal while rendering the order dated 9.9.2009 did not consider ground No.15 raised in memo of grounds in ITA No.25/2004 which deals with the deduction claimed under Section 80IA of the Income Tax Act. It is further stated that the Tribunal in the common order dated 18.8.2009 in ITA No.43/coch/2001 and ITA Nos.21 to 24/coch/2005 considered a similar ground on the entitlement of assessee for allowance under Section 80IA of the Income Tax Act and granted the relief to assessee. The Appellate Tribunal on account of inadvertant mistake did not consider Ground No.15 in ITA 25/coch/2004 and allowed the said appeal in part. The Tribunal after understanding the error sought to be

ITA No.255 of 2010 4 corrected through Miscellaneous Petition No.145/Coch/2009, elaborated the omission pointed out in the common order dated 18.8.2009. The Appellate Tribunal accepted the case of assessee and allowed deduction under section 80IA of the Act. The common order dated 18.8.2009 refers to a few orders passed by the Tribunal in similar circumstances to which the assessee is a party. In the ultimate analysis, the non-consideration of Ground No.15 in ITA No.25/2004, it is urged, needs re-consideration by following the common order dated 18.8.2009 in ITA No.25/2004. 4. The Appellate Tribunal through the order under appeal having noticed a few inadvertant typographical or clerical errors accepted the prayer in MP No.145/Coch/2009 in ITA 25/2004. Hence the instant appeal at the instance of the revenue. 5. Before proceeding to examine the limited grounds raised by the revenue against the order under appeal, we would like to advert to the following dates: 6. On 1.6.2010, the instant Tax Appeal was filed. The appeal was listed before the Court on 7.12.2010; 28.6.2016, 30.10.2018,

ITA No.255 of 2010 5 23.11.2018 and on 19.3.2019; adjourned at the request of appellant. The Tax Appeal is yet to be admitted. 7. The appellant raises the following substantial questions of law for consideration by this Court in the appeal filed against order in MP No.145/coch/2009. 1. a) Whether on the facts and in the circumstances of the case and also in view of the fact that the amount had not been advanced for carrying on the business of the assessee, the assessee is entitled to claim deduction of the same b) Whether on the facts and in the circumstances of the case— i) did the assessee discharge the burden of proof ii) did the assessee establish the claim of saving of reputation iii) the assessee is entitled to the deduction. 2. Whether on the facts and in the circumstances of the case [and as major part of the claim of bad debts written off is the investment made by the assessee in Mazda Industries and Leasing Ltd. During April 1992 out of which the company could not recover the interest due for the year ended 31.3.1993 and also the principal amount] — i) the write off of the above investment as revenue loss is in accordance with law? ii) Can it be considered as “bad debts” allowable under

ITA No.255 of 2010 6 Sec.36(1)(vii) as the condition specified in Sec.36(2) are not satisfied? 8. The learned Standing Counsel appearing for the appellant contends that there is no error apparent on the record warranting consideration of any of the prayers made in the application, M.P.No.145/coch/2009. According to him, the assessee, if so advised, ought to have challenged the common order dated 9.9.2009 in ITA No.25/Coch/2004. At any rate, it is contended that the assessee is not entitled for deduction under Section 80IA of the Act, unless and until the assessee satisfactorily demonstrates all the requirements necessary in this behalf. Therefore he prays for setting aside the order under appeal and restore the orginal order dated 9.9.2009 in ITA No.25/coch/2004. 9. Mr.Joseph Markose, the learned Senior Counsel for the assessee contends that the appeal is filed against the order in Miscellaneous Petition No.145/Coch/2009. There is no substantial question raised by the revenue except reproducing the statutory requirement for availing the deduction under Section 80IA of the Act. According to him, the revenue is not disputing the premise on

ITA No.255 of 2010 7 which the order dated 8.1.2010 in M.P.No.145/coch/2009 is made by the Appellate Tribunal. According to him, the revenue is also not disputing the relief granted by the Tribunal to the assessee in the common order dated 18.8.2009 in Tax Appeal No.538/coch/05/. At this length of time, a probable ground that could be raised by the revenue is that the common order dated 18.8.2009 referred to or relied on in connected orders therein are interdicted or set aside by the Superior Court. The very basis in the impugned order if is erased, then the appellant could pray for admission or hearing of appeal on merits. The learned Senior Counsel relies on the order under appeal which admits the errors pointed out by the assessee and the Tribunal, as a matter of fact, admitted that the Tribunal failed to consider Ground No.15 raised under section 80IA of the Act. Keeping in view the conclusions recorded by Tribunal it contended that it is not for this Court to interfere with the errors admitted by the Tribunal. He prays for dismissing the appeal. 10. We have in chronological order explained the consideration of two different batches of appeals by the Tribunal

ITA No.255 of 2010 8 and also the order passed by the Tribunal in this behalf. The Tribunal, while accepting the point raised in Ground No.15, held as follows: "After considering the rival submissions, we are of the view that for the deduction under section 80IA, the gross total income of the assessee includes any profit or gains derived from industrial undertaking. While computing total income deduction from such profits and gains has to be allowed for the purpose of deduction under section 80IA. Here in this case, it is not disputed by the Department that the assessee will qualify for section 80IA deduction. Therefore, the total income of the assessee includes any profit or gains derived from any business of an industrial undertaking. The only dispute before us is quantification. Therefore, we agree with the contentions of the Id. Counsel for the assessee that deduction has to be from the gross total income of the assessee which includes any profit or gains derived from any business of industrial undertaking. Therefore, we set aside the order of the CIT(A) and restore the issue back to the file of the Assessing Officer for proper adjudication on merits. It is to be underlined that for qualification for deduction under section 80IA, the deduction is to be from the gross total income of the assessee which includes any profit or gains derived from any business of industrial undertaking. Therefore, this issue is allowed in favour of the assessee for statistical purposes."

From the above it is clear that the appellate tribunal, to ensure consistency on the assessee's entitlement a deduction under Section 80IA of the Act, allowed the Miscellaneous Petition. We are

ITA No.255 of 2010 9 prepared to take up the case for admission and issue notice to the respondents provided the substantial questions raised in this behalf convince this Court that the reasons stated in the Miscellaneous Petition or the conclusions recorded by the Appellate Tribunal are in any manner vitiated. In the totality of the circumstances, we are constrained to see whether the Tribunal while accepting the prayer in MP No.145/Coch/2009 has deviated from the procedure and entertained any ground not available within the four corners of law. For the reasons recorded in the common orders both dated 18.8.2009 and 9.9.2009, the prayer in M.P.No.145/coch/2009 is accepted by the Tribunal. No exception is pointed out against the order under appeal. No substantial question of law arises for consideration. The findings recorded in the impugned order are by reference to earlier orders passed by the Tribunal. The appeal fails and accordingly dismissed. Sd/-P.R.RAMACHANDRA MENON JUDGE sd/- S.V.BHATTI JUDGE css/

ITA No.255 of 2010 10 APPENDIX ANNEXURE A COPY OF MISCELLANEOUS PETITION FILED BY THE ASSESSEE. ANNEXURE B COPY OF THE ORDER DATED 8.1.2010 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH MP NO.145/COCH/2009 FOR THE A.Y.1998-99. ANNEXURE C ASSESSMENT ORDER U/S 143(3) OF THE IT ACT DATED 19.3.2001 FOR AY 1998-99. ANNEXURE D THE ORDER OF THE INCOME TAX (APPEALS) DATED 21.10.2003 FOR AY 1998-99. ANNEXURE E THE COMPOSITE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.538, 273 (COCH)/05 FOR AY 1999-2000 AND IN ITA NO.25/COCH/2004 FOR AY 1998-99 DATED 9.9.2009. ANNEXURE F THE COMPOSITE ORDER OF THE ITAT IN ITA NO.43,21 TO 24/COCH/2005 AND 84,111 AND 112/COCH/2004 FOR AY 1996-1997 AND 1997-98 DATED 18.8.2009.