THE COMMISSIONER OF INCOME TAX vs. T.C.USHA, CHETHANA CASHEW CORPORATION

PDF · subscribers
ITA/823/2009HC KeralaKLHC01025584200926 October 2018Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court agreed with the Revenue's submission that the Tribunal's reliance on a previous order was inappropriate due to the distinct factual matrix of the present case. The Court found that the Tribunal's order needed to be set aside. The Court also noted that neither the FAA nor the Tribunal had adequately considered the specific categories of industries under Section 80IA and the relevant commencement periods. Given the lack of a thorough factual determination concerning the categorization of the appellant's industry under the various clauses of Section 80IA, the High Court set aside the Tribunal's order and remanded the issue back to the Tribunal for a comprehensive reconsideration. The appeals were allowed without any observation on the merits of the issue or answering the questions of law, as a more thorough factual determination was deemed necessary. No costs were awarded.

What were the facts?

The appeals concern assessment years 1997-1998 and 1998-1999, relating to a claim under Section 80IA of the Income Tax Act, 1961. The assessee, T.C. Usha (Chaitanya Cashew Corporation), had a unit in Andhra Pradesh. The First Appellate Authority (FAA) disallowed the Section 80IA claim, citing that the unit commenced manufacture after April 1, 1993, and Andhra Pradesh was not an industrially backward State specified in the 8th Schedule. The FAA also noted that the assessee's accounts were not separately maintained for the industrial undertaking, and the profit computation did not account for administrative expenses. The Tribunal, however, set aside the FAA's order, relying on a previous decision. The Revenue appealed this decision to the High Court.

What were the issues?

1. Whether the Tribunal erred in setting aside the disallowance of the Section 80IA deduction based on a previous order, when the facts and legal provisions applicable to the assessee's case were distinct? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The Tribunal's reliance on a previous order was misplaced as that case involved a leased unit, which is factually and legally different from the present case where the assessee owned the unit. The Revenue argued that the order of the Tribunal should be set aside due to this lack of identity in facts and law. 2. Whether the assessee's industrial undertaking is eligible for deduction under Section 80IA, considering the specific clauses and commencement periods stipulated therein, and the nature of the industry and its location? (Question of mixed law and fact)

Which sections of the Income-tax Act were involved?

Section 80IA

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 26TH DAY OF OCTOBER 2018 / 4TH KARTHIKA, 1940 ITA. No.715 of 2009 AGAINST THE ORDER IN ITA NO.468/2002 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 05-04-2005 APPELLANT/RESPONDENT: THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON, SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT: T.C.USHA, CHAITANYA CASHEW CORPORATION KOLLAM. BY ADVS. SMT.PREETHA S.NAIR SRI.E.K.NANDAKUMAR (SR.) SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.RAJA KANNAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26.10.2018, ALONG WITH ITA.823/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA. Nos.715 & 823 of 2009 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 26TH DAY OF OCTOBER 2018 / 4TH KARTHIKA, 1940 ITA. No.823 of 2009 AGAINST THE ORDER IN ITA NO.468/2002 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 05-04-2005 APPELLANT/RESPONDENT: THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON, SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT: T.C.USHA, CHAITANYA CASHEW CORPORATION, KOLLAM. BY ADVS. SMT.PREETHA S.NAIR SRI.E.K.NANDAKUMAR (SR.) SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.RAJA KANNAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26.10.2018, ALONG WITH ITA.715/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA. Nos.715 & 823 of 2009 3 JUDGMENT K. Vinod Chandran, J. The assessment years we are concerned with in the appeals are 1997-1998 and 1998-1999. The claim is under Section 80IA of the Income Tax Act, 1961 [for brevity, the Act] as it existed prior to 2000. The First Appellate Authority confirmed the dis- allowance under Section 80IA of the Act with respect to the unit established in Andhra Pradesh. The reasons for the same are seen in the order under paragraph 6 numbered as (i) to (iii). It is an admitted fact that the unit had commenced manufacture after 01.04.1993. The First Appellate Authority found that with respect to an industrial undertaking located in an industrially backward State, deduction can be claimed only if it begins to manufacture or produce articles at any time

ITA. Nos.715 & 823 of 2009 4 during the period between 01.04.1993 and 31.03.1998. In the case of the respondent, the unit was in Andhra Pradesh, which was not one of the industrially backward States as specified in the 8th schedule. It was also found that under sub-Section (2) of Section 80IA of the Act, a deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible, unless the accounts of the industrial undertaking for the previous year relevant to the assessment year have been audited by an Accountant as defined under Explanation to Section 80IA(2) of the Act, as it existed prior to 2000. The assessee also has to furnish along with the return of income the report of such audit in the prescribed form duly signed and verified. The assessee's accounts though were audited under Section 45AB, there is no separate accounts maintained for the industrial undertaking for which the allowance was claimed. Thirdly, it

ITA. Nos.715 & 823 of 2009 5 was found that the profit as computed by the appellant does not take into account administrative and other expenses. The assessee was then directed to approach the Assessing Officer, who was directed to consider the claim if the reasons indicated under (i) and (ii) above were not applicable in the assessee's case. 2. The Tribunal set aside the order of the First Appellate Authority relying on an order in another case. The learned Senior Counsel, Government of India [Taxes] would contend that the said order of the Tribunal, which was confirmed by this Court, was with respect to the processing carried out by an assessee in a unit, which did not belong to the assessee, but was leased out by the assessee. There was no identity of facts or law in the instant case, with the relied on decision, is the contention taken. We agree with the said submission of the learned Senior Counsel appearing

ITA. Nos.715 & 823 of 2009 6 for the Revenue. In such circumstances, the order of the Tribunal has to be set aside. 3. In the context we notice Section 80IA as was available in the Income Tax Act at that point of time. Various types of industries were referred to therein, under the various clauses, the commencement of which were specified between different periods. There is no consideration by the First Appellate Authority or the Tribunal as to under which category the appellant's industry would fall. If, as the First Appellate Authority found, the claim is only on the basis of an industrial undertaking existing in a industrially backward State, then on the finding of the First Appellate Authority, there is no question of a remand. We notice that the issue has not been considered with reference to the facts and the law as seen from Section 80IA of the Act, as it existed during the relevant assessment years.

ITA. Nos.715 & 823 of 2009 7 4. In such circumstances, we set aside the order of the Tribunal and remand the issue to the Tribunal to consider the claim under Section 80IA of the Act with reference to the categorisation of the appellant's industry; as is discernible from the various clauses. 5. The appeals are allowed without any observation on the merits of the issue and without answering the questions of law, since a more thorough and comprehensive determination on facts is necessary. No order as to costs. Sd/- K. VINOD CHANDRAN, JUDGE Sd/- ASHOK MENON, JUDGE 27/10/18 //True Copy// P.A. To Judge

ITA. Nos.715 & 823 of 2009 8 APPENDIX OF ITA NO.715/2009 PETITIONER'S EXHIBITS: ANNEXUREA TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 12.08.2002. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] DATED 23.09.2002.

ANNEXURE C TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 05.04.2005. RESPONDENT'S EXHIBITS:- NIL APPENDIX OF ITA NO.823/2009 PETITIONER'S EXHIBITS: ANNEXUREA TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 21.03.2001. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] DATED 23.09.2002.

ANNEXURE C TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 05.04.2005. RESPONDENT'S EXHIBITS:- NIL //TRUE COPY// P.A. TO JUDGE

More judgments on Section 80IA

All 1,796 judgments and leading authorities on Section 80IA →

Recent GST High Court judgments

Search GST case law →