COMMISSIONER OF INCOME TAX vs. M/S.NEELACHAL ISPAT NIGAM LTD.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 17TH DAY OF NOVEMBER 2021 / 26TH KARTHIKA, 1943 ITA NO. 11 OF 2018 ITA 25/COH/2017(2011-12) OF I.T.A.TRIBUNAL,COCHIN BENCH, KOCHI, ERNAKULAM APPELLANT/S: M/S.KINGS INFRA VENTURES LTD A-1,ATRIA APARTMENT, PERUMANOOR ROAD,THEVARA, KOCHI 682 015(PAN AACCV 3411D) BY ADVS. JOSEPH MARKOSE (SR.) V.ABRAHAM MARKOS ISAAC THOMAS P.G.CHANDAPILLAI ABRAHAM SHARAD JOSEPH KODANTHARA ABRAHAM JOSEPH MARKOS RESPONDENT/S: THE COMMISSIONER OF INCOME TAX,C R BUILDINGS, I S PRESS ROAD,ERNAKULAM, KOCHI 682 018 BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX OTHER PRESENT: SR ADV P.K.R. MENON SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 17.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA NO. 11 OF 2018 -2- J U D G M E N T (Dated this the 17th day of November 2021) Basant Balaji J., The appellant challenges the order in I.T.A.No. 25/Coch/2017 dated 14.7.2017 of the Income Tax Appellate Tribunal, Cochin Bench, Kochi. 2. The appellant was engaged in the business of aqua farm culture and sale of its proceeds. Until 2007, the company functioned in the name of 'M/s.Victory Aqua Farm Limited' and later changed its name to 'M/s.Kings Infra Ventures Limited' and ventured into construction business. The appellant filed its return of income for the assessment years 2011-12, disclosing nil income. The appellant, while filing the return of income, made claim for Rs.1,52,76,459/-

ITA NO. 11 OF 2018 -3- (carried forward loss), which included depreciation loss of Rs.1,88,52,496/- (pertaining to the assessment years 1996-97 to 2009-10) and loss amounting to Rs.35,85,037/- (pertaining to the assessment years 1996-97 and 1997-98). The total loss of Rs.1,52,76,459/- was adjusted against the taxable income of Rs.35,85,037/- for the assessment year 2011-12, whereby the taxable income came to be nil. The assessment authority disallowed the set off of loss and assessed the same as tax for the assessment year 2011-12. Thereafter, the assessment was completed under Section 143(3) of the Income Tax Act. 3. The appellant filed appeal before the Commissioner of Income Tax Appeals. 4. The first appellate authority, after a detailed discussion of the relevant provisions, as well as the

ITA NO. 11 OF 2018 -4- adjustment of various Rules and Tribunals, allowed the Appeal in part. 5. As per the said order, the first appellate authority, allowed the amount of unabsorbed depreciation brought forward from the assessment years 1996-97 and 1997-98 were allowed to be set off against the taxable income for the assessment years 2010-11, 2011-12 and the following the years. The first appellate authority made a further direction to the Assessing Officer to take necessary steps to reopen the assessment proceedings for the assessment years impacted and if the assessment or re-assessment for the preceding assessment years 2010-11 serves to be disallowed any concurrent claim of the unabsorbed depreciation losses relating to assessment years 1997-98 as above, necessary

ITA NO. 11 OF 2018 -5- adjustment will need to be made to disallow any such equivalent value in the impugned assessment year 2011-12 and succeeding assessment years as applicable. 6. Aggrieved by the order of first appellate authority in respect of reopening of assessment years for the assessment years 2010-11 and succeeding years 2012-13 onwards, the appellant filed second appeal before in Income Tax Appellate Tribunal, Cochin Bench. The main ground raised by the appellant before the second appellate authority was that the grounds raised before the first appellate Authority was in respect of dis-allowance of unabsorbed depreciation for the assessment year 2011-12 and since the first appellate authority allowed the same, it exceeded its jurisdiction to further direct the Assessing officer to reopen the assessment proceedings

ITA NO. 11 OF 2018 -6- for the assessment year 2010-11 and 2012-13 onwards, more so when there was no appeal by the revenue. The Tribunal came to the definite conclusion that it is vested with the jurisdiction only to examine the issue concerning the year 2011-12 and since the first appellate authority has allowed set off, the Tribunal need not go into other directions made by the first appellate authority in respect of reopening of the assessment for the assessment years 2010-11 and 2012-13 onwards. The appellant herein challenges the order of the Income Tax Appellate Tribunal on various grounds. The appellant raises the following substantial questions of laws to be considered by this court: i. “Whether on the facts and circumstances of the case the Appellate Tribunal was justified in sustaining the order of the Appellate

ITA NO. 11 OF 2018 -7- Commissioner, in toto? ii. Ought not the Appellate Tribunal to have held that the assets were 'kept ready for use' and therefore, there was no occasion for the 1st appellate authority to take a different stand? iii.Whether on the facts and circumstances of the case the Appellate Tribunal was justified in holding that the first appellate authority did not exceed the jurisdiction when it directed reopening of assessment for different years? iv. Ought not the appellate Tribunal to have held that the 1st appellate authority must confine itself to the year in which the appeal is filed by the appellant, more particularly, when the appellate tribunal in Annexure-E order categorically stated that it will confine the consideration of the issues for the assessment year 2011-12 alone? v. Whether on the facts and circumstances of the case the appellate tribunal was correct in confirming the

ITA NO. 11 OF 2018 -8- reopening of assessments for different assessment years, in the appeal filed by the assessee for the assessment year 2011-12, in the absence of any challenge from the Department, in respect of the years in which reassessment was directed to be made by the 1st appellate authority?Whether the finding of fact by the Appellate Tribunal erroneous and perverse?”

ITA NO. 11 OF 2018 -9- of the assessment for the years 2010-11 and 2012-13 onwards, as it was done by the 1st appellate authority without jurisdiction in an appeal filed by the assessee challenging the disallowing of unabsorbed depreciation. for the year 2011-12. He further submitted that even though his appeal was partly allowed by the first appellate authority granting relief for the assessment years 2011-12, the further direction made by the First appellate authority to the Assessing Officer, is unwarranted. 9. The senior counsel argued that since the appeal before the Tribunal was in respect of second part of the order of the first appellate Authority directing the Assessing Officer to reopen the assessment, the Tribunal ought to have interfered and allowed the appeal setting aside the direction made by the

ITA NO. 11 OF 2018 -10- first appellant authority to the Assessing Officer. 10. On the other hand, the senior counsel, Shri P K R Menon submitted that the Tribunal has properly considered the appeal filed by the assessee and the assessee was given liberty to challenge the order of the Assessing Officer when remedial measures are taken by the Assessing Officer for the respective years 2010-11 and the assessment years 2012-13 onwards and its premature for him to argue that interference is unwarranted at this stage. The remedy of the assessee is not foreclosed by the order of the Tribunal and hence, it does not warrant any interference with the order of the Tribunal. 11. We have anxiously considered the rival submissions made at the Bar. On going through Annexure - D, it is evident that the appellant challenges the order of the first appellant

ITA NO. 11 OF 2018 -11- authority on the ground that the first appellate authority exceeded its jurisdiction which was limited to the assessment year 2011-12 and by giving direction or re-opening the assessment for the years 2010-11 and 2012-13 onwards, was without jurisdiction. On going through the order of the Tribunal, we have noted that the grounds raised by the appellant mentioned above was taken note of, but the said contention was not answered by the Tribunal for the reason that the issue before the Tribunal was only in respect of the assessment years 2011-12. The Tribunal did not go into the grounds raised by the appellant in respect of the direction given by the 1st appellate authority to the Assessing Officer to re-open the assessment for the years 2010-11 and 2012-13 onwards. According to us, the Tribunal ought to have

ITA NO. 11 OF 2018 -12- answered the said question, but failed to do so. The learned senior counsel Shri P K R Menon appearing for the Revenue also agrees that the Tribunal has not properly considered all of the relevant questions raised by assessee. He, however, suggests persuasively that this court ought not examine all the aspects afresh. We are in total agreement with him, after reading the order of the Tribunal and we are of the view that the matter requires re-consideration by the Tribunal in respect of the issue regarding the direction given by the 1st appellant authority to the Assessing officer to re-open the assessment for the years 2010-11 and 2012-13 onwards. The questions are answered accordingly. In the result, this Income Tax Appeal is allowed, setting aside the order of the Tribunal dated 14.7.2017 and remitting

ITA NO. 11 OF 2018 -13- back for fresh consideration, in accordance with law, after giving both the parties opportunity of hearing, at any rate, within a period of three months from the date of receipt of a certified copy of this judgment. Needless to state, that we are not gone into the merits of the contentions raised by either of the parties. The Tribunal is free to look into the issue afresh and pass fresh final orders as directed above.

SD S.V.BHATTI,

JUDGE SD BASANT BALAJI,

JUDGE dl/