THE COMMR.OF INCOME TAX,COCHIN vs. M/S.MUKKATTUKARA CATHOLIC CO.LTD.,TSR.

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ITR/1/2005HC KeralaKLHC01023402200525 November 2008Bench: HONOURABLE MR.JUSTICE HARUN-UL-RASHID,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court declined to answer the question referred. Instead, it disposed of the reference case by directing the ITAT to follow its own order in connected cases, if those appeals had already been disposed of based on the High Court's judgment in ASST. C.I.T. V. MAJESTIC KURIES AND LOANS (P) LTD. (2004) 267 I.T.R. 593. The Tribunal was further directed to dispose of the present appeal either by following its previous order or by disposing of this appeal along with other cases that rely on the same High Court judgment. The specific finding on the accrual versus realization basis of income from kuries was not decided on merits by the High Court in this instance.

What were the facts?

The Commissioner of Income Tax, Cochin, filed a Tax Reference Application (ITR No. 1 of 2005) before the High Court of Kerala, challenging an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The dispute concerns the assessment of income on terminated kuries for the assessment year 1991-92, with an addition of Rs. 2,39,638/-. The Assessing Officer had adopted an accrual basis for income assessment, while the assessee contended for a realization basis, aligning with its accounting system. The Tribunal had previously accepted the assessee's position for several years. A reference for earlier years was disposed of by the High Court in ASST. C.I.T. V. MAJESTIC KURIES AND LOANS (P) LTD., (2004) 267 I.T.R. 593, though the outcome of that judgment was not known to the current bench.

What were the issues?

1. Whether the income from terminated kuries should be assessed on an accrual basis or a realization basis, as per Section 145 of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that income should be accounted for on a realization basis, consistent with its system of accounting. The assessee's position had been accepted by the Tribunal in prior years. Revenue's Contention: The revenue, through the Assessing Officer, adopted an accrual basis for assessing the income from terminated kuries. The revenue's specific arguments or reliance on authorities are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 145

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID TUESDAY, THE 25TH NOVEMBER 2008 / 4TH AGRAHAYANA 1930 ITR.No. 1 of 2005() ------------------- AGAINST THE ORDER IN RA. 324/COCH/1998 IN ITA.691/COCH/1994 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPLICANT(S): -------------- THE COMMISSIONER OF INCOME TAX, COCHIN BY SC SRI. P.K. R . MENON, SR. COUNSEL FOR GOI.(IT) RESPONDENT(S): --------------- M/S. MUKKATTUKARA CATHOLIC CO. LTD., MUKKATTUKARA, THRISSUR.

THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 25/11/2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C .N. RAMACHANDRAN NAIR & HARUN-UL-RASHID, JJ. -------------------------------------------- I.T.R. No. 1 OF 2005 -------------------------------------------- Dated this the 25th day of November, 2008 JUDGMENT Ramachandran Nair,J. Question raised in the reference application filed by the department pertains to assessment of income on terminated kuries. The addition involved for the assessment year 1991-92 is Rs. 2,39,638/-. The Assessing Officer adopted accrual basis for the assessment of income on terminated kuries. However, assessee claimed that income accounted is on realisation basis, based on the system of accounting followed by it. The assessee's case is seen accepted by the Tribunal for several years. Reference for earlier years was disposed of by this Court vide judgment reported in ASST. C.I.T. V. MAJESTIC KURIES AND LOANS (P) LTD., (2004) 267 I.T.R. 593. The outcome of the said judgment is not known. We therefore decline to answer the question referred, but dispose of the reference case by directing the Tribunal to follow their order in the connected case if they have already disposed

2 of those appeals based on above judgment of this Court and dispose of this appeal also or dispose of this appeal along with other cases based on the very same judgment of this Court. A copy of this judgment under the seal of the High Court and signature of the Registrar-General shall be forwarded to the Income tax Appellate Tribunal, Cochin Bench, Cochin. (C.N.RAMACHANDRAN NAIR) Judge. (HARUN-UL-RASHID) Judge. kk

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