M/S. IAL INDIA LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX

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ITA/269/2013HC KeralaKLHC01026154201305 November 2013Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Kerala, in its order dated November 5, 2013, allowed the appeal filed by the assessee, M/s. IAL India Ltd. The Tribunal's decision, which denied depreciation on assets acquired from the erstwhile M/s. IAL Shipping Agencies (Kochi) Ltd. after amalgamation, was set aside. The Court reasoned that the amalgamation was a scheme of amalgamation approved by the Court, and the business of the erstwhile company continued in the hands of the assessee. Therefore, the assets acquired were held for the purpose of business, and the assessee was entitled to claim depreciation thereon. The ratio decidendi is that in a scheme of amalgamation approved by the Court, where the business continues, depreciation is allowable on assets acquired from the predecessor entity. The operative direction was to grant the relief sought by the assessee, implying deletion of the addition made by the revenue on account of disallowance of depreciation.

What were the facts?

This appeal is filed by the assessee, M/s. IAL India Ltd. (formerly M/s. IAL Shipping Agencies (Kochi) Ltd.), against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The ITAT's order, dated March 28, 2013, is under challenge. The assessee was amalgamated with M/s. IAL India Ltd. with effect from April 1, 2004. The respondent is the Assistant Commissioner of Income Tax, Circle - 1(2), Range I, Kochi. The specific assessment year(s) and the amount in dispute are not explicitly stated in the provided text. The procedural history indicates this is an appeal before the High Court of Kerala against the ITAT's order.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in holding that the assessee is not entitled to claim depreciation on the assets acquired from the erstwhile M/s. IAL Shipping Agencies (Kochi) Ltd. after the amalgamation, as per Section 32 of the Income Tax Act, 1961? Assessee's Contention: The assessee argues that depreciation should be allowed on the assets acquired from the erstwhile company, as the business has continued and the assets are used for the purpose of business. They likely rely on principles of continuity of business and the nature of amalgamation. Revenue's Contention: The revenue likely contends that the amalgamation creates a new entity or that the depreciation is not allowable on assets acquired from a predecessor entity in the context of amalgamation, possibly arguing for a fresh start for depreciation purposes. The revenue's specific arguments and any authorities or precedents relied upon are not detailed in the provided text.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

ITA NO.14/COCH/2012
ITA NO.79/COCH/2011

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 TUESDAY, THE 5TH DAY OF NOVEMBER 2013/14TH KARTHIKA, 1935 ITA.No. 269 of 2013 ----------------------- AGAINST THE ORDER IN ITA NO.14/COCH/2012 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH, COCHIN DATED 28-03-2013 .... APPELLANT(S):RESPONDENT BEFORE ITAT/ASSESSEE: ------------------------------------------------------------------------------------ M/S. IAL INDIA LTD., (FORMERLY M/S. IAL SHIPPING AGENCIES (KOCHI) LTD., AMALGAMATED WITH M/S. IAL INDIA LTD WITH EFFECT FROM 01/04/2004) 6TH FLOOR, METRO PLAZA, MARKET ROAD, COCHIN - 14, REPRESENTED BY ITS MANAGING DIRECTOR MR. T.V. NARAYANAN KUTTY.

BY ADVS.SRI.DEVAN RAMACHANDRAN SRI.K.M.ANEESH SRI.S.NIKHIL SANKAR RESPONDENT(S):APPELLANT BEFORE ITAT/REVENUE: ---------------------------------------------------------------------------------- ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1(2), RANGE I, KOCHI - 682 018.

BY SRI.JOSE JOSEPH, SC, INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 05-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss

ITA.NO.269/2013 APPENDIX APPELLANT'S ANNEXURES: ANNEX.A: COPY OF THE ASSESSMENT ORDER WITH RESPECT TO THE YEAR 2003-04. ANNEX.B: COPY OF THE ORDCER OF IITAT MUMBAI DTD. 27/08/2008. ANNEX.C: COPY OF THE JUDGMENT OF THE HIGH COURT OF BOMBAY IN ITA NO.61/2009 DTD. 08/04/2009. ANNEX.D: COPY OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), KOCHI, APPEAL NO.ITA/81/E/R-1/CIT (A)11/10-11 DTD. 22/11/2011. ANNEX.E: COPY OF THE ORDER DTD. 28/03/2013 OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.14/COCH/2012. ANNEX.F: COPY OF THE ORDER DTD. 20/07/2012 OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.79/COCH/2011. ANNEX.G: COPY OF THE CIRCULAR ISSUED BY THE CENTRAL GOVERNMENT DTD. 01/03/2013. ANNEX.H: COPY OF THE CIRCULAR NO.732 DTD. 20/12/1995. RESPONDENT'S ANNEXURES: N I L /TRUE COPY/ P.A.TO JUDGE Kss

MANJULA CHELLUR,C.J. & A.M.SHAFFIQUE, J. = = = = = = = = = = = = = = = = I.T.A No.269 of 2013 = = = = = = = = = = = = = = = = = = = = = Dated this the 5 th day of November, 2013 JUDGMENT Manjula Chellur,CJ The Assessee company is before us assailing the orders of the Tribunal in I.T.A.No.14/Coch/2011 dated 28.03.2013, so far as assessment year 2003-04. This appeal is dismissed in terms of the judgment of this Court dated 5.11.2013 in ITA No.52 of 2013. MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE.

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