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The High Court of Kerala, while acknowledging the petitioner's appeal (Ext.P3) pending before the 3rd respondent (Commissioner of Income Tax (Appeals)), deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the appeal expeditiously. The Court did not decide on the merits of the Section 80P deduction claim or the assessing officer's reasoning. The operative direction was for the 3rd respondent to consider and pass appropriate orders on Ext.P3 as expeditiously as possible. Additionally, the Court ordered that no coercive steps shall be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the disposal of the appeal. No issue was expressly left undecided; the Court chose to defer the decision to the appellate authority.
The High Court of Kerala did not decide the merits of the assessment order or the appeal. Instead, the Court deemed it appropriate to direct the Appellate Authority (the 3rd respondent, Commissioner of Income Tax (Appeals)) to consider the appeal filed by the petitioner in a time-bound manner. The Court ordered the 3rd respondent to consider and pass appropriate orders on the petitioner's appeal (Ext.P3) as expeditiously as possible. Furthermore, the Court directed that no coercive steps shall be initiated pursuant to the assessment order (Ext.P1) until the disposal of the appeal. The issue of whether the Assessing Officer correctly rejected the Section 80P deduction was left to be decided by the appellate authority.
The High Court allowed the writ petition to the limited extent of directing the competent Authority to take up the statutory appeal (Ext.P3) and dispose of it after following due procedure. The Court emphasized that this should be done as expeditiously as possible, but not later than two months from the date of receipt of a copy of the judgment. The Court also directed that all further action pursuant to the Assessment Order (Ext.P1) would stand deferred until the appeal is disposed of and the resultant order is communicated to the petitioner. The reasoning was based on the fact that Ext.P3 is a statutory appeal that requires decision by the competent authority before further action can be taken, especially considering the interpretation of Section 80P of the Income Tax Act, 1961, which has been subject to various judicial pronouncements.
The High Court of Kerala, after hearing arguments for some time, granted the petitioner's request. The Court allowed the withdrawal of the Writ Petition (Civil) No. 21910 of 2021. Crucially, the Court also reserved the liberty for the petitioner to file a fresh writ petition, acknowledging the issuance of a new order by the first respondent during the pendency of the original petition. The reasoning was based on the changed circumstances due to the new order. The operative direction was to close the writ petition as withdrawn, with the liberty to file a fresh one.
The High Court, upon considering the submissions of both parties, decided to dispose of the writ petition with a specific direction. The Court directed the 2nd respondent, the Commissioner of Income Tax (Appeals), to consider and pass orders on the stay petition (Ext.P5) within a period of three months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered that all coercive proceedings against the petitioner shall be kept in abeyance until a decision is taken on the stay petition. The High Court did not delve into the merits of the assessment order or the stay petition itself, focusing solely on ensuring a timely adjudication of the stay application and preventing immediate recovery actions.
The High Court held that the writ petition could be disposed of with a direction. The Tribunal (4th respondent) was directed to consider and pass orders on the stay petitions (Ext.P8 and Ext.P9) within a period of three months from the date of receipt of a copy of the judgment. Until such a decision is taken by the Tribunal, all coercive proceedings against the petitioner were to be kept in abeyance. The ratio decidendi is that the High Court can issue directions to quasi-judicial authorities like the ITAT to expedite the consideration of stay petitions to prevent prejudice to the assessee, especially when coercive action is apprehended.
The High Court of Kerala, while acknowledging the pendency of the petitioner's appeal before the appellate authority, directed the appellate authority to consider the appeal expeditiously. The Court did not decide on the merits of the Section 80P deduction claim or the applicability of the Mavilayi Service Cooperative Bank judgment. The operative direction was to ensure a time-bound disposal of the appeal. The Court also granted a stay on coercive steps pursuant to the assessment order until the disposal of the appeal. No issue was expressly left undecided, as the matter was disposed of on procedural grounds.
The High Court held that the writ petition was not maintainable. The Court found substantial force in the respondent's submission that when an alternate statutory remedy exists, a writ petition can only be entertained if the order is non-est or passed without jurisdiction. The petitioner's sole ground for challenging the assessment order was that their objections were not properly considered and that the order lacked reasons. The Court concluded that Ext.P22 could not be considered void in law on these grounds. Therefore, the petitioner was directed to pursue their alternate statutory remedy. The Court explicitly stated that it was not entering into the merits of the rival contentions or assessing Ext.P22.
The High Court held that the petitioner had indeed e-filed the appeal, as evidenced by the acknowledgment receipt (Ext.P2) dated September 23, 2021. The Court noted that the petitioner had initially attempted to file the appeal via email due to technical glitches on the Income Tax Department's portal, and subsequently filed it through the e-filing method. The Court found that the main issue in the appeal concerned the disallowance of deduction under Section 80P, which the petitioner contended was contrary to the judgment in Mavilayi Service Co-operative Bank and Others v. Commissioner of Income Tax, Calicut and Others [2021 (1) KLT 485]. Following its own precedent in similar matters, the Court directed the 2nd respondent (Commissioner of Income Tax (Appeals)) to consider and dispose of the appeal expeditiously. Until such disposal, all coercive proceedings against the petitioner pursuant to the assessment order (Ext.P1) were to be kept in abeyance.
The High Court of Kerala, while acknowledging the submissions of both parties, held that the writ petition could be disposed of with directions. The Court directed the Income Tax Appellate Tribunal (ITAT) to consider and pass orders on the stay petitions (Ext.P4 and Ext.P4(a) to Ext.P4(f)) filed by the petitioner within a period of two months from the date of receipt of a copy of the judgment. As an interim measure, the Court ordered that all coercive proceedings against the petitioner be kept in abeyance until the ITAT passed its orders on the stay petitions. The Court did not decide the merits of the appeals or the stay petitions themselves, but rather directed the ITAT to expedite the process.
The High Court held that once an assessment is completed, there is no prohibition against initiating proceedings for penalty under Section 274 read with Section 270A of the Income Tax Act. The mere fact that an appeal against the assessment order is pending consideration does not serve as a reason to defer the initiation of penalty proceedings. The court reasoned that accepting the petitioner's contention would unnecessarily delay the penalty proceedings, which is not contemplated under the statutory scheme. The court reiterated its reluctance to interfere in tax matters when statutory forums are available, citing the decision in Assistant Commissioner of State Tax v. Commercial Steel Ltd. [2021 (52) G.S.T.L.385]. The court found that the petitioner's case did not fall within the parameters for interference under Article 226 of the Constitution. Therefore, the writ petition was dismissed, leaving the petitioner at liberty to pursue the available statutory remedies.
The High Court of Kerala directed the concerned Appellate Authority (amongst respondents 2 and 3) to take up the stay petition and the delay condonation petition filed by the petitioner. These petitions are to be considered in accordance with the law within a period of three months from the date of receipt of a copy of the judgment. Furthermore, the Court ordered that all coercive proceedings pursuant to the notice of demand (Ext.P2) shall be kept in abeyance until the stay petition and delay petition are decided. The Court did not decide on the merits of the e-assessment itself but focused on the procedural aspects of the appeal and the pending applications.
The High Court of Kerala held that in similar cases, it has directed the appeals to be disposed of in a time-bound manner. The petitioner stands on the same footing as those other cases, and there is no reason to deviate from the established practice. Accordingly, the Court directed the 2nd respondent (Principal Commissioner of Income Tax) to consider and pass appropriate orders on Ext.P3 appeal filed by the petitioner as expeditiously as possible. Pending the disposal of the appeal, all coercive proceedings pursuant to the assessment order (Ext.P1) were ordered to be kept in abeyance. The principle established is that the High Court can direct expeditious disposal of pending appeals, especially when supported by Supreme Court precedents, and can grant interim protection against coercive recovery.
The High Court held that the Office Memorandum of 2016, as revised in 2017, cannot control the discretionary powers of the appellate authority. The Court noted that the appeal filed by the petitioner was pending consideration. Therefore, the demand for deposit (Ext.P4) may not have relevance for the time being. Following consistent practice in similar cases where claims for deduction under Section 80P were disallowed, the Court directed the 2nd respondent (National Faceless Appeal Centre) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously. Pending this consideration, all coercive proceedings pursuant to the assessment order (Ext.P1) were directed to be kept in abeyance. The principle is that pending appeal, coercive steps should be stayed, and the appellate authority should be allowed to decide the appeal on merits, especially when the Supreme Court's decision in Mavilayi Service Co-operative Bank is relevant.
The High Court acknowledged the pronouncement of the Supreme Court in the Mavilayi Service Co-operative Bank Ltd. case, which lays down the law on the entitlement of deduction for co-operative societies. The Court agreed with the submissions of both parties that the matter should be remitted to the Tribunal for fresh consideration and disposal in accordance with law, keeping in view the applicable precedents, including the Supreme Court's judgment in the Mavilayi case. The parties were granted liberty to place material in support of their respective contentions. The questions were answered in favour of the assessee and against the revenue, and the matter was remitted to the Tribunal for disposal. The operative direction is to set aside the judgment under appeal and remand the matter to the Tribunal. No issue was expressly left undecided.
The High Court of Kerala did not decide the merits of the case. Instead, it disposed of the writ petition by directing the Appellate Authority (2nd respondent) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously, within a period of six months from the date of receipt of the judgment. The Court clarified that the Appellate Authority should not insist on the deposit of 20% of the amount in dispute, considering the nature of the petitioner's plea. Furthermore, no coercive steps are to be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the appeal is decided. The specific issue of whether the petitioner satisfied the ingredients of a Primary Agricultural Credit Society and the consequential deduction under Section 80P was left to be decided by the Appellate Authority.
The High Court did not decide the merits of the case. Instead, it directed the Appellate Authority (2nd respondent) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously, within six months from the receipt of the judgment. The Court clarified that the Appellate Authority should not insist on the deposit of 20% of the disputed amount, considering the nature of the petitioner's plea. Furthermore, no coercive steps are to be initiated against the petitioner pursuant to the assessment order (Ext.P1) until the appeal is decided. The High Court left the substantive issues of the appeal undecided.
The High Court of Kerala, in its writ jurisdiction, disposed of the writ petition by directing the Appellate Authority (2nd respondent) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) expeditiously, within a period of six months from the date of receipt of the judgment. The Court clarified that the Appellate Authority should not insist on the deposit of 20% of the disputed amount, considering the nature of the petitioner's plea. Furthermore, the Court ordered that no coercive steps shall be initiated pursuant to the assessment order (Ext.P1) until the appeal is decided. The issue of whether the assessing officer erred in rejecting the deduction under Section 80P was not decided on merits by the High Court, but was remitted to the Appellate Authority for consideration.
The High Court held that while it would not normally interfere with assessment orders under Article 226 of the Constitution, it can intervene when there is a violation of the principles of natural justice. In this case, the Court found that the petitioner's response (Ext.P10) to the show-cause notice (Ext.P9), which was issued to elicit a response on the proposed disallowance of deduction under Section 80P(2)(d), was not considered in the final assessment order (Ext.P11). The Court noted that the petitioner had raised objections of substance and produced documents along with its response. The failure to consider this response and the accompanying documents was deemed a negation of the petitioner's right to natural justice. Therefore, the assessment order was set aside. The Court directed the respondent to pass fresh orders after affording an opportunity of hearing to the petitioner, within 60 days, without being influenced by the Court's observations.
The High Court held that the writ petition was not a fit case for invoking its extraordinary jurisdiction under Article 226 of the Constitution of India. The Court found that the petitioner had not exhausted the statutory remedies available to them. It reiterated that the normal course of action for an assessee is to approach the statutory appellate authorities, except in very limited circumstances such as a breach of fundamental rights, violation of principles of natural justice, orders passed in excess of jurisdiction, or challenges to the constitutionality of a statute. The Court concluded that none of these exceptional circumstances existed in the present case. Therefore, the petitioner was relegated to the remedy of a statutory appeal. The writ petition was dismissed, with liberty reserved to the petitioner to pursue appropriate statutory remedies.
The High Court held that the grounds raised by the assessee were not available in the circumstances. The Court reiterated its previous observation in ITA No. 98/2009, which found the Tribunal's approach of excluding the original statement based on the retracted statement to be illegal and erroneous. The previous judgment directed that "due evidentiary value" be given to the statement made on June 22, 1998. Upon remand, the Tribunal gave due evidentiary value to the statement, and the assessee failed to place any other material before the Tribunal to displace the impact of the Annexure-C statement, despite the High Court's observation. The Court found no illegality or infirmity in the Tribunal's findings, which were affirmed by the concurrent view of the Commissioner and the Tribunal. Therefore, the Court saw no reason to interfere with the order under appeal. The questions were answered in favour of the revenue and against the assessee.
The High Court allowed the writ petition. It directed the competent respondent or the Authority under the faceless scheme to take up and dispose of the petitioner's appeal (Ext.P2) expeditiously, after affording the petitioner an opportunity of being heard, as per the Act. The Court held that the Mavilayi Service Co-operative Bank Limited judgment, cited by the revenue, prima facie had some bearing on the issues raised by the petitioner. Consequently, until the appeal was disposed of and the resultant order communicated, all action for recovery of amounts as per the assessment order (Ext.P1) would stand deferred. The Court did not expressly leave any issue undecided.
The High Court found that the Tribunal's findings were not impugnable in normal course. However, due to additional documents brought on record by the Revenue, a fresh examination of the assessee's bona fide belief or reasonable cause was necessary.
The High Court of Kerala, while acknowledging the pendency of the appeal filed by the petitioner before the Commissioner of Income Tax (Appeals), deemed it appropriate to direct the appellate authority to consider the appeal in a time-bound manner. The Court did not decide on the merits of the Section 80P deduction or the applicability of the Supreme Court judgment. Instead, the operative direction was for the 3rd respondent (Commissioner of Income Tax (Appeals)) to consider and pass appropriate orders on the petitioner's appeal (Ext.P2) as expeditiously as possible. Furthermore, the Court ordered that no coercive steps shall be initiated pursuant to the assessment order (Ext.P1) until the disposal of the appeal. The issue of whether the assessing officer erred in not considering the Supreme Court judgment was implicitly deferred to the appellate authority.
The High Court of Kerala, in its writ jurisdiction, did not decide the merits of the petitioner's claim for deduction under Section 80P. Instead, the Court deemed it appropriate to direct the Appellate Authority (the 3rd respondent, Commissioner of Income Tax (Appeals)) to consider the appeal filed by the petitioner (Ext.P2) in a time-bound manner. The Court ordered the 3rd respondent to consider and pass appropriate orders on Ext.P2 as expeditiously as possible. Furthermore, the Court directed that no coercive steps shall be initiated pursuant to the assessment order (Ext.P1) until the disposal of the appeal. The issue of whether the AO erred in rejecting the deduction under Section 80P was thus left for the appellate authority to decide.
The High Court held that agricultural income is exempt from the Central Income Tax Act and tax paid under the Kerala Agricultural Income Tax Act cannot be claimed as a deduction against business income under Section 43B of the Central Act. The court also dismissed the assessee's argument that past acceptance of similar claims by the revenue should bind them.
The High Court held that agricultural income is exempt from the Central Income Tax Act and tax paid under the Kerala Agricultural Income Tax Act cannot be claimed as a deduction against business income under Section 43B of the Central Act. The court also dismissed the assessee's argument that past acceptance of similar claims by the revenue should bind them.
The High Court held that agricultural income is exempt from the Central Income Tax Act and tax paid under the Kerala Agricultural Income Tax Act cannot be claimed as a deduction against business income under Section 43B of the Central Act. The court also dismissed the assessee's argument that past acceptance of similar claims by the revenue should bind them.
The High Court held that agricultural income is exempt from the Central Income Tax Act and tax paid under the Kerala Agricultural Income Tax Act cannot be claimed as a deduction against business income under Section 43B of the Central Act. The court also dismissed the assessee's argument that past acceptance of similar claims by the revenue should bind them.
The High Court held that agricultural income is exempt from the Central Income Tax Act and tax paid under the Kerala Agricultural Income Tax Act cannot be claimed as a deduction against business income under Section 43B of the Central Act. The court also dismissed the assessee's argument that past acceptance of similar claims by the revenue should bind them.
The High Court held that the intimations (Exts.P2 and P8) directing the deposit of 20% of the total demand were issued by the Income Tax Officer, not the Appellate Authority. The Court noted that the petitioner had not yet filed any application for stay before the Appellate Authority. It agreed with the revenue's submission that Appellate Authorities, being quasi-judicial bodies with discretionary powers, are not bound by office memorandums. The Court referred to the Delhi High Court judgment in "Turner General Entertainment Networks" case, observing that authorities must apply their mind independently of office memorandums when deciding stay applications. The Kerala High Court judgment (Ext.P9) was distinguished as being based on the peculiar facts of that case. The Court directed the petitioner, if advised, to move an appropriate application for stay before the Appellate Authority, which was to pass orders within two months. Liberty was also granted to the Appellate Authority to consider and pass orders on the appeal itself if deemed desirable.
The High Court held that the matter requires reconsideration by the Tribunal. The Court noted that in the assessee's own case for AY 2007-08, a similar claim for deduction as a co-operative society was denied, and that decision was under appeal before the Supreme Court. However, the Court also acknowledged the principle laid down in the Mavilayi Service Co-operative Bank Ltd. case, which supports the assessee's claim. Given the conflicting positions and the need to examine additional details, the Court decided not to follow the assessee's previous case or blindly apply the Mavilayi case. Instead, the High Court set aside the impugned orders in ITA Nos. 2 & 6/2017 (assessee's appeals) and remitted them to the Tribunal for fresh adjudication on the assessee's claim as a co-operative society and its entitlement to deduction under Section 80P(2). The assessee and the Revenue were granted liberty to place additional materials before the Tribunal. Similarly, the Revenue's appeals (ITA Nos. 30 & 31/2017) were also set aside and remitted to the Tribunal for fresh consideration, as the relief granted to the Revenue was dependent on the outcome of the assessee's entitlement to Section 80P(2) deduction.
The High Court noted that the substantial questions of law raised in this appeal were already considered and answered in favour of the assessee in the assessee's own case for the assessment year 2007-08. Therefore, the appeal was dismissed.
The High Court held that the matter required reconsideration by the Tribunal. The Court noted that in the assessee's own case for AY 2007-08, the High Court had denied the claim for deduction as a Co-operative Society, a decision that was under appeal before the Supreme Court. However, the Court also acknowledged the principle laid down in the Mavilayi Service Co-operative Bank Ltd. case, which could potentially allow the assessee's claim as a Co-operative Society for deduction under Section 80P(2). Given the conflicting positions and the need for examination of certain details, the Court decided not to dismiss the assessee's appeals nor grant the deduction outright based on Mavilayi. Instead, the questions were answered in favour of the assessee to the extent that the matter needed reconsideration by the Tribunal. Both the assessee and the Revenue were granted liberty to place additional materials before the Tribunal. Consequently, the orders under appeal in ITA Nos. 2 & 6/2017 (assessee's appeals) and ITA Nos. 30 & 31/2017 (Revenue's appeals) were set aside and remitted to the Tribunal for adjudication afresh.
The High Court found that the matter required reconsideration by the Tribunal, as the prior decisions were not entirely satisfactory. Both the assessee's and Revenue's appeals were set aside.
The High Court held that the matter required reconsideration by the Tribunal. The Court set aside the orders under appeal in ITA Nos. 2/2017 and 6/2017 (filed by the assessee) and ITA Nos. 30/2017 and 31/2017 (filed by the Revenue). The Court found that while the assessee's own case (ITA No. 103/2011) had previously denied the claim, and the "Mavilayi Service Co-operative Bank Ltd." case supported the assessee's claim, a fresh examination of certain details was necessary. The High Court granted liberty to both the assessee and the Revenue to place additional materials before the Tribunal. The questions of law were answered in favour of the assessee to the extent that the matter requires reconsideration by the Tribunal on the assessee's claim as a Co-operative Society and its entitlement to deduction under Section 80P(2). The appeals were remanded to the Tribunal for adjudication afresh.
The High Court directed the petitioner to make another attempt to upload the stay petition on or before 30/9/2021. If the upload was successful within the stipulated time, the Appellate Authority was directed to consider the stay petition within two months from the date of receipt of a copy of the judgment. In the event the petitioner was unable to upload the stay petition by 30/9/2021, and this inability was intimated to the Appellate Authority along with a copy of the judgment, the Appellate Authority was to consider the physically filed stay petition (Ext.P7). All coercive proceedings pursuant to the notice of demand (Ext.P2) were to be kept pending until the consideration of the stay petition. The Court did not decide on the merits of the penalty order or the appeal itself, focusing solely on the procedural issue of uploading the stay petition.
The High Court held that for Substantial Question No. 2, concerning weighted deduction under Section 35(2AB), the revenue failed to make out a ground warranting interference with the ITAT's order of remand. The court noted that its decision in connected matters (ITA Nos. 39 and 44 of 2017) was available for parties to refer to the Assessing Officer. The remand order of the Tribunal was upheld, and the question was answered against the revenue and in favour of the assessee. For Substantial Questions Nos. 1 and 3, relating to pre-operative expenditure and upward TP adjustment, the Tribunal had directed the Assessing Officer to re-examine these issues for cogent and valid reasons. The High Court found that entertaining the revenue's arguments would involve delving into minor details which were substantially questions of fact, and that the revenue was unable to satisfy the court that remand was avoidable. Considering the scope of Section 260A and that the issues were at best before the Assessing Officer, the High Court confirmed the remand order by the Tribunal. The questions were answered in favour of the assessee and against the revenue. The appeal was dismissed.
The High Court dismissed the appeal, following the Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and Chirakkal Service Co-operative Bank Ltd. The questions raised in the appeal were answered accordingly.
The High Court of Kerala, while acknowledging the contentions raised by the petitioner, including the alleged invalidity of the assessment order under Section 143 of the Act, did not decide on the merits of these issues. Instead, the Court directed the Commissioner of Income Tax (Appeals) (3rd respondent) to consider and pass appropriate orders on the appeal filed by the petitioner (Ext.P9) within a period of three months from the date of receipt of a certified copy of the judgment. The Court also ordered that all coercive proceedings pursuant to the assessment order (Ext.P6) and the notice (Ext.P7) be kept in abeyance until the appeal is decided. No specific finding was made on the validity of the assessment order or the grounds raised by the petitioner.
The High Court held that the invocation of power under Section 263 of the Income Tax Act to interdict a draft assessment order proposed by the Assessing Officer is unavailable to the Principal Commissioner of Income Tax. The Court reasoned that at the stage of a draft assessment order, the condition required for invoking Section 263, namely that the order is erroneous insofar as it is prejudicial to the interest of the Revenue, does not arise. The Court noted that its view was similar to the view of the Tribunal and was in accordance with the scheme of the Act envisaged by Section 144C and Section 263. Therefore, the questions of law were answered in favour of the assessee and against the Revenue. The Income Tax Appeal was dismissed.
The High Court of Kerala directed the Appellate Authority (the first respondent) to dispose of the appeal filed by the petitioner (Ext.P2) within an outer period of six months from the date of receipt of a copy of the judgment. This disposal is to be in accordance with the law, after affording an opportunity of hearing to the petitioner. Crucially, the Court clarified that the appeal should be disposed of without insisting on the payment of 20% of the tax demanded. Furthermore, all recovery proceedings pursuant to the assessment order were to be kept in abeyance until a decision was taken by the Appellate Authority on the appeal. The Court's reasoning was based on the circumstances of the case and the precedent set in similar matters.
The High Court directed the 2nd and 3rd respondents (Commissioner of Income Tax (Appeals)) to take up the stay petition (Ext.P4) filed along with the appeal (Ext.P3) and consider it, passing appropriate orders within two months from the date of receipt of a certified copy of the judgment. Furthermore, the Court ordered that all coercive proceedings initiated pursuant to the penalty order (Ext.P2) shall be kept in abeyance until such orders on the stay petition are passed. The Court found that directing the disposal of the stay petition in a time-bound manner was appropriate given the circumstances. No specific issue regarding the merits of the penalty or appeal was decided.
The High Court held that the requirement of re-doing the assessment procedure under Section 144C upon remand to the Assessing Officer is mandatory, and the omission in following this procedure is an incurable defect. The Court found the decisions relied upon by the revenue to be distinguishable. The decisions relied upon by the assessee, dealing with similar circumstances under Section 143(3) read with Section 144C, were found to be applicable. The Court agreed with the assessee that the revised final assessment order (Annexure-E) was made under Section 143(3) and not a final revised assessment order made in compliance with DRP directions. Therefore, the assessee was justified in moving the CIT(Appeals). The Court found difficulty in accepting the revenue's argument to sustain the order in Annexure-E. The ITAT had correctly considered the assessee's objections against Annexure-E and recorded findings that resulted in the order under appeal. The Court agreed with the assessee that Annexure-E was limited only to the issues remitted by the Tribunal in the earlier order. The questions of law were answered in favour of the assessee and against the revenue. The appeal was dismissed.
The High Court partly allowed the appeal. It upheld the Tribunal's decision to allow pre-operative expenses as revenue expenditure but disagreed with the Tribunal's allowance of prepaid expenses, stating they should be claimed in the year incurred. The Court also upheld the deletion of disallowance on currency conversion rate difference.
The High Court decided on the substantial questions as follows: (a) The disallowance under Section 14A was held in favour of the assessee, against the Revenue, by following the dictum in Federal Bank Ltd. and the reasoning in ITA No.1091/2009, holding that Section 14A was not applicable for AY 2007-08. (b) The issue regarding provision for bad and doubtful debts under Section 36(1)(viia) was covered against the assessee and in favour of the Revenue by the judgment in Commissioner of Income Tax v. Lord Krishna Bank Ltd. However, the matter was remitted to the Assessing Officer for disposal afresh on the claim of rural branches. (g) The issue regarding provision for doubtful debts for rural branches being allowable under Section 36(1)(vii) was answered in favour of the assessee and against the Revenue, but the issues covered were remitted to the Assessing Officer for decision afresh. (c) The disallowance for provision for leave encashment under Section 43B was answered against the assessee and in favour of the Revenue, following judgments in ITA No.186/2011 and Union of India v. M/s. Exide Industries Ltd. (d) & (e) The additions made in respect of surplus realized on sale of pledged jewellery and excess cash were held in favour of the assessee and against the Revenue. The findings of the Tribunal were set aside, and the matter was remitted to the Assessing Officer for disposal afresh, considering RBI Circulars and the nature of the receipt. (f) The levy of interest under Section 234B was answered in favour of the assessee, against the Revenue, for statistical purposes, with the obligation to pay dependent on the outcome of issues (d) and (e) and any independent consideration. The appeal was allowed in part.
The High Court of Kerala held that the Income Tax Appeals filed by the Revenue were rendered ineffective because the assessee had opted for the 'Vivad Se Vishwas' scheme during the pendency of the appeals. The Court dismissed the appeals as ineffective. The Court also granted liberty to the assessee or Revenue to file a petition to recall the order if the assessee's request under the 'Vivad Se Vishwas' scheme was not taken to its logical conclusion. The specific findings of the ITAT or the substantive issues that led to the original appeals were not decided by the High Court, as the matter was disposed of on a procedural ground related to the settlement scheme.
The High Court addressed each substantial question by referring to its judgment in ITA No. 44 of 2017 and other cited cases. For Questions 1, 1.1, 1.2, 3, 3.1, and 3.2, the Court followed the reasoning in ITA No. 44 of 2017 and an unspecified case (ITA No. 249 of 2015), answering them in favour of the assessee and against the revenue. This implies the Court upheld the ITAT's decision to treat the Chennai unit expenditure as revenue and the foreign exchange gains as capital, to be adjusted as per Section 43A. For Question 4, concerning prepaid expenses, the Court noted that the same expenditure was claimed in AY 2010-11, where it was rejected. However, for AY 2011-12, the Court found the assessee entitled to claim these expenses, confirming the ITAT's allowance of Rs. 5,15,34,726/-, answering this question in favour of the assessee. For Questions 2, 2.1, and 2.2, relating to weighted deduction under Section 35(2AB) for R&D expenses outside India, the Court followed the reasoning in ITA No. 44 of 2017, answering these questions in favour of the revenue and against the assessee. This indicates the Court did not allow the deduction for R&D expenses incurred outside India. For Additional Questions 5 and 6, concerning the Tribunal's competence to remit issues and its decision on transfer pricing adjustment, the Court followed the judgment in CIT v. Assam Travels Shipping Service, Dibrugarh, answering these questions in favour of the assessee and against the revenue. The appeal was allowed in part.
The High Court of Kerala held that the Income Tax Appeals are dismissed as ineffective because the assessee has opted for the benefit provided under the 'Vivad Se Vishwas' scheme during the pendency of the appeals. The court reasoned that the scheme is intended to provide a mechanism for settling disputes, and once an assessee avails this option, the pending appeals become redundant. The ratio decidendi is that the 'Vivad Se Vishwas' scheme, by its nature, aims to conclude disputes, and appeals that are still under consideration become ineffective if the underlying dispute is settled under the scheme. The court granted liberty to the assessee/Revenue to file a petition to recall the order if the assessee's request under the scheme is not taken to its logical end.
The High Court held that the writ petition was premature. The Court observed that Ext.P7 was only a notice under Section 143(2) read with Section 147 of the Income Tax Act, 1961, proposing to re-open assessment proceedings. The petitioner had an effective alternative remedy to appear before the concerned officer and file necessary objections. Therefore, invoking the jurisdiction of the High Court under Article 226 at this stage was inappropriate. The Court dismissed the writ petition, reserving the petitioner's right to pursue remedies before the statutory authority.