HTHE COMMISSIONER OF INCOME TAX vs. THE VAIKUNDAM TUBBER CO.LTD.

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ITR/89/1999HC KeralaKLHC01014057199905 January 2009Bench: HONOURABLE MR.JUSTICE P.N.RAVINDRAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that all reassessments in question were barred by limitation. The Court referred to its own previous decision in CIT v. The Vaikundam Rubber Co. Ltd., 249 I.T.R. 19, which was between the same parties and dealt with a similar issue. In that decision, the Court had clarified that the limitation period saved under Section 150(2) of the Income Tax Act is to be computed with reference to the order appealed against. In this instance, the relevant order was the ITAT's order dated March 1, 1984. The Court noted that the reassessments were made on September 7, 1991, which falls outside the four-year period from March 1, 1984. The Court also observed that even the notices for reassessment were served beyond the time limit. Consequently, the Court answered the question referred in all the cases in favour of the assessee and against the revenue. The operative direction was to dispose of the reference cases accordingly.

What were the facts?

This judgment concerns multiple tax reference cases (ITR Nos. 89 to 96 of 1999) filed by the Commissioner of Income Tax (Revenue) and The Vaikundam Rubber Co. Ltd. (Assessee) against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The core issue is whether reassessments completed under Section 147 of the Income Tax Act, 1961, for assessment years 1967-68 to 1974-75 were time-barred. The reassessments were initiated to tax interest on additional compensation awarded in land acquisition cases, shifting from a receipt basis to an accrual basis for taxation of this interest. The ITAT had allowed the assessee's case for the first six years, finding the reassessments time-barred, while upholding them for the remaining two years.

What were the issues?

1. Whether the reassessments completed under Section 147 of the Income Tax Act, 1961, for assessment years 1967-68 to 1974-75 are barred by limitation? Assessee's Contention: The assessee argued that the reassessments were time-barred. They relied on a previous decision of the High Court of Kerala in CIT v. The Vaikundam Rubber Co. Ltd., 249 I.T.R. 19, which addressed a similar issue between the same parties. This decision held that the limitation period under Section 150(2) of the Act should be computed with reference to the date of the order appealed against, which in this case was the ITAT's order dated March 1, 1984. The assessee contended that the reassessments, made on September 7, 1991, were beyond the four-year period from this date. Revenue's Contention: The judgment does not record specific arguments made by the revenue in these reference cases. However, the fact that the revenue filed these references indicates their disagreement with the ITAT's finding that the reassessments were time-barred for the initial six years.

Which sections of the Income-tax Act were involved?

Section 147,Section 150(2)

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 P.N.RAVINDRAN MONDAY, THE 5TH JANUARY 2009 / 15TH POUSHA 1930 ITR.No. 89 of 1999() -------------------- AGAINST THE ORDER IN RA.201/COCH/97 IN ITA.282/COCH/1993 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPLICANT(S): -------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI. JOSE JOSEPH RESPONDENT(S): --------------- THE VAIKUNDAM RUBBER CO.LTD., TRIVANDRUM. BY ADV. SRI.K.VINOD CHANDRAN THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 05/01/2009, ALONG WITH ITR NO. 90 TO 96 OF 1999 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C .N. RAMACHANDRAN NAIR & P.N. RAVINDRAN, JJ. -------------------------------------------- I.T.R. Nos. 89 to 96 of 1999 -------------------------------------------- Dated this the 5th day of January, 2009 JUDGMENT Ramachandran Nair,J. In all the Reference cases, first six of which are at the instance of the revenue, and the remaining two at the instance of the assessee, the question raised is whether reassessments completed under Section 147 of the I.T. Act for the assessment years 1967-68 to 1974-75 are time barred. The Tribunal relying on Section 150(2) of the Act allowed assessee's case for the first six years and for the remaining two years the Tribunal upheld the reassessments as within time. Therefore the question referred in the Reference Cases is one and the same, that is, whether all the reassessments involved in the particular years are barred by limitation or not. Counsel for both sides agree that the very same issue came up before this Court between the same parties in decision in CIT V. THE VAIKUNDAM RUBBER CO. LTD.,249 I.T.R. 19, wherein the issue has been answered in favour of the assessee. In fact reassessments were made to bring to tax interest on additional compensation awarded in land acquisition cases. In the original

2 assessments, interest was assessed on receipt basis. However, based on another decision of this Court, department made reassessments to assess interest on accural basis. However, this Court in assessee's case for subsequent years that is 1975-76 to 1997-78 held that limitation saved under Section 150(2) is to be computed with reference to the order appealed against which in this case is the order of the Tribunal on 1.3.1984. Going by the dates of reassessments given in the reference cases, reassessments are made only on 7.9.1991 which is beyond four years from 1.3.1984. In fact it is to be seen that even reassessment notices were served beyond the time limit. Consequently we dispose of the reference cases by answering the question reference in all the cases in favour of the assessee and against the revenue. 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, for issuing consequential orders. (C.N.RAMACHANDRAN NAIR) Judge. (P.N. RAVINDRAN) Judge. kk

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