PENINSULAR PLANTATIONS LTD.,PATTOM,TVPM. vs. COMMR.OF INCOME TAX,THIRUVANANTHAPURAM

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ITR/7/2005HC KeralaKLHC01023408200525 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. The Court noted that the ITAT's order was in favour of the assessee, cancelling the addition based on a High Court judgment that had cancelled the underlying transaction. However, since the Revenue indicated that the High Court's judgment was under appeal before the Supreme Court, the High Court left it open for the parties to reagitate the matter before the Tribunal if the Supreme Court reversed the High Court's decision. The reference application was disposed of with a direction to the Tribunal to rectify its order if the Supreme Court reversed the judgment upon which the Tribunal had disposed of the appeal. No specific finding was made on the merits of the short-term capital gains assessment.

What were the facts?

This is a Tax Reference filed by the assessee, The Peninsular Plantation Ltd., against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The ITAT's order in RA No. 138/COCH/1998 in ITA No. 900/COCH/1992 had cancelled an addition made by the Revenue. The addition was related to the assessment of short-term capital gains arising from a transaction where the assessee had paid an advance of Rs. 5 lakhs for the sale of an estate. The ITAT's decision was based on a judgment of the High Court that had cancelled the said transaction. The Revenue stated that the High Court's judgment was pending appeal before the Supreme Court.

What were the issues?

1. Whether the assessment of short-term capital gains is to be made in light of the cancellation of the transaction of sale of estate by the High Court (a question of law). Assessee's Contention: The assessee filed the reference application, seemingly in their favour as the ITAT had cancelled the addition. However, the judgment notes that the assessee chose to file the reference. The specific arguments of the assessee are not detailed, but the filing of the reference implies a potential dissatisfaction or a need for clarification. Revenue's Contention: The Standing Counsel for the Income Tax Department stated that the High Court's judgment, which formed the basis of the ITAT's order, was pending appeal before the Supreme Court. This suggests the Revenue intended to challenge the ITAT's decision if the Supreme Court overturned the High Court's ruling.

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. 7 of 2005() ------------------- AGAINST THE ORDER IN RA. 138/COCH/1998 IN ITA.900/COCH/1992 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPLICANT(S): -------------- THE PENINSULAR PLANTATION LTD.,PATTOM, PATTOM PALACE P.O. THIRUVANANTHAPURAM BY ADV. SRI. RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES)

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. 7 OF 2005 -------------------------------------------- Dated this the 25th day of November, 2008 JUDGMENT Ramachandran Nair,J. This reference is at the instance of the assessee and the question involved is assessment of short-term capital gains. We notice from the Tribunal's order that based on judgment of this Court, cancelling the transaction that is sale of estate pertaining to which assessee paid Rs. 5 lakhs as advance,the Tribunal cancelled the addition. We do not know why assessee chose to file reference application when the order is in their favour. Standing counsel for the I.T. Department stated that judgment of this Court based on which Tribunal rendered their judgment is pending in appeal before the Supreme Court. If that be so, we leave it open to the parties to reagitate the matter before the Tribunal, if the Supreme Court reverses the judgment of this Court in appeal. We dispose of the reference application by declining to answer the question referred but with direction to the Tribunal to rectify the

2 order if the Supreme Court reverses the judgment of this Court based on which the Tribunal disposed of the appeal. A copy of this judgment under the seal of the High Court and signature of Registrar-General shall be forwarded to the Income tax Appellate Tribunal, Cochin Bench. (C.N.RAMACHANDRAN NAIR) Judge. (HARUN-UL-RASHID) Judge. kk

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