Kerala High Court Judgments — 2021

The High Court held that the substantial questions of law raised in the instant appeal were similar or identical to substantial question no.(c) in ITA No. 249/2015. On August 26, 2021, question no.(c) in ITA No. 249/2015 was answered in favour of the Revenue and against the assessee. By adopting the reasons stated in that prior decision, the High Court answered the questions in the present appeal in favour of the Revenue and against the assessee. The observations made in ITA No. 249/2015 were applied to the instant assessment year. The operative direction was to follow the reasoning in the previous judgment, implying confirmation of the ITAT's order.

The Tribunal held that the income from the property should be treated as income from house property, not business income. It also confirmed the disallowance of the provision for commission as an unascertained liability, as the assessee could not substantiate the exact amount or the recipients.

The High Court held that the substantial questions of law were identical to a previous appeal (ITA No. 249/2015). In that previous appeal, the question was answered in favour of the Revenue and against the assessee.

The High Court allowed the appeal, following the Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and Chirakkal Service Co-operative Bank Ltd.

The High Court of Kerala held that the appeal filed by the assessee, M/s. Kodiyeri Service Co-operative Bank Ltd., is to be allowed. This decision was based on the joint submission by both the assessee and the Revenue that the questions raised in the appeal were substantially covered by the Supreme Court's judgment in the case of Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another. The Court explicitly stated that it was following the said Supreme Court judgment. Consequently, the Income Tax Appeal was allowed. No specific issues were decided on merits by the High Court, other than acknowledging the applicability of the Supreme Court precedent. The operative direction was to allow the appeal.

The High Court of Kerala, after hearing the counsel for both the assessee and the Revenue, noted that both parties agreed that the issues in the appeal were substantially covered by the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another. Consequently, the High Court allowed the Income Tax Appeal by following the aforementioned Supreme Court judgment. The specific findings of the ITAT or the detailed reasoning of the Supreme Court judgment were not elaborated upon in this High Court order, as the decision was based on the concession made by both parties. No issues were expressly left undecided.

The tribunal upheld the Family Court's decision, finding the father's income to be Rs. 1.5 lakhs per month based on adverse inference for not producing salary certificates. The awarded maintenance of Rs. 10,000/- per child was deemed reasonable.

The High Court allowed the appeal, stating that the questions raised were substantially covered by the Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and Chirakkal Service Co-operative Bank Ltd.

The High Court of Kerala allowed the Income Tax Appeal. The decision was based on the agreement between the assessee and the revenue that the issues in the present appeal were substantially covered by the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another and the High Court judgment in Chirakkal Service Co-operative Bank Ltd v. Commissioner of Income Tax. The Court followed these precedents in allowing the appeal. The specific findings or reasoning from the cited judgments were not elaborated upon in this order, as the appeal was disposed of based on the concession of the parties. No issues were expressly left undecided.

The High Court of Kerala, after hearing the counsel for both parties, noted that the questions raised in the appeal were substantially covered by the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. and others v. Commissioner of Income Tax and another and the High Court's judgment in Chirakkal Service Co-operative Bank Ltd v. Commissioner of Income Tax. Consequently, the Court allowed the Income Tax Appeal by following the principles laid down in these two judgments. No specific amount in dispute was mentioned. The operative direction was to allow the appeal.

The High Court allowed the appeal, following the precedent set by the Supreme Court in the Mavilayi Service Co-operative Bank Ltd. case. This implies the Tribunal's order was set aside.

The High Court allowed the appeal, following the Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and Chirakkal Service Co-operative Bank Ltd. These judgments likely dealt with the tax treatment of co-operative banks.

The High Court allowed the appeal, following the Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and Chirakkal Service Co-operative Bank Ltd. The specific grounds for allowing are not detailed but are based on precedent.

The High Court affirmed the Tribunal's order of remand but clarified that the assessing officer should consider the matter untrammelled by the Tribunal's specific observations regarding the physical examination of cheques. The assessing officer is free to accept any legally acceptable evidence from the assessee.

The High Court allowed the writ petition and set aside the impugned order (Ext.P5). The Court was convinced that the necessary fees for the statutory appeal (Ext.P2) had already been paid by the petitioner, as evidenced by Ext.P3. Consequently, the Court directed the competent authority of the Income Tax Department to take up the appeal (Ext.P2) and dispose of it in accordance with law, following due procedure. The issue of whether the 2nd respondent was the competent authority under the Faceless Appeal Scheme was implicitly resolved by directing the 'competent authority' to hear the appeal, leaving it to the department to identify the correct authority. The Court did not explicitly decide on the merits of the original appeal.

The High Court affirmed the ITAT's order of remand to the assessing authority. The court found merit in the assessee's contention that certain observations in the ITAT's order were prejudicial. Specifically, the observation that the penalty deletion was improper without physical cheque examination and the liberty to take adverse inference were deemed to potentially restrict the assessing officer's discretion and cause prejudice. The court clarified that the assessing authority would consider and pass orders untrammelled by these specific observations and would be free to accept any legally acceptable evidence produced by the assessee. The court answered the first question against the assessee, the second question in favour of the assessee, and stated that the third question did not arise for consideration as the appeals were remitted in full. The appeals were allowed as modified.

The High Court affirmed the Tribunal's order of remand but clarified that the assessing officer should consider the matter untrammelled by the Tribunal's specific observations regarding the physical examination of cheques. The assessing officer is free to accept any legally acceptable evidence from the assessee.

The High Court held that the Centralised Processing Centre (CPC) correctly issued the order (Ext.P7) rejecting the rectification application on the grounds of lack of jurisdiction, as the file had been transferred to the Assessing Officer. The court accepted the revenue's submission that the prima facie view expressed in the CPC's order regarding the absence of error in the original order was merely a consequence of using a standard format and not a decision on merits. The court noted that the petitioner had already filed a rectification application (Ext.P8) with the Assessing Authority on December 16, 2020. Therefore, the court directed the 2nd respondent-Income Tax Officer to take up Ext.P8 application, dispose of it on its merits after affording the petitioner an opportunity of being heard and following due procedure, and issue an appropriate order expeditiously, but not later than three months from the date of receiving a copy of the judgment. The issue of whether the original order sought to be rectified was indeed erroneous was left to be decided by the Assessing Authority.

The High Court found that the Tribunal's remand was unnecessary as the Tribunal, as the final fact-finding authority, could have examined the bye-laws and other materials itself. The Court set aside the Tribunal's order and remanded the matter back to the Tribunal for fresh consideration.

The Tribunal held that there is no restriction in the Income Tax Act preventing the assessee from availing the balance of the additional depreciation in the subsequent year. The High Court agreed with this view.

The Tribunal erred in disallowing the foreign exchange loss by treating it as a capital loss and by lifting the corporate veil. The matter should have been considered from the perspective of commercial expediency.

The Tribunal held that a draft assessment order under Section 144C is not amenable to revision under Section 263. This is because, at the draft stage, there is no final assessment order and thus no prejudice to the revenue can be established.

The High Court disposed of the writ petition by directing the concerned respondent to consider and decide the stay petition within a period of three months from the date of communication of the judgment. The Court also directed that the impugned recovery action, pursuant to the assessment order, should be kept in abeyance until the disposal of the stay petition. The petitioner was directed to cooperate with the respondent for the expeditious disposal of the stay petition and the appeal. The Court did not decide on the merits of the assessment order or the stay petition itself, but rather on the procedural aspect of ensuring the stay petition is addressed promptly and recovery is deferred.

The Tribunal held that for set-off under Section 70(3), the loss must be computed under Sections 48 to 55 of the Act. Since the gains from shares and mutual funds were exempt under Section 10(38), the loss arising from them could not be set off against capital gains from land.

The High Court addressed the issues as follows: For Question Nos. 1 and 2, concerning whether carbon credit realisations are revenue or capital receipts, the Court noted the preponderance of views from various High Courts, including Andhra Pradesh, Karnataka, Bombay, Madras, and Allahabad. After independently appreciating the nature of the receipt, the Court found that the Tribunal had erred in its findings. Consequently, Question Nos. 1 and 2 were answered in favour of the assessee and against the revenue, setting aside the Tribunal's findings. For Question No. 3, which was dependent on the outcome of the first two questions, the Court stated that it need not be considered as the findings were in favour of the assessee. For Question Nos. 4 and 5, relating to the disallowance of part depreciation on the Gurgaon office building, the Court referred to its own prior judgment in ITA No. 26 of 2013 for assessment year 2003-2004, which had answered the issue in favour of the revenue and against the assessee. By analogy, Question Nos. 4 and 5 were answered in favour of the revenue and against the assessee. The appeal was allowed in part.

The High Court of Kerala, while acknowledging the 'piquant situation' faced by the Nidhi companies, decided not to adjudicate on the validity of the amendments to Section 406 of the Companies Act, 2013, and the Nidhi Rules, 2014. These challenges were expressly left undecided and kept open for future consideration. The Court directed that each petitioner would be at liberty to approach the competent authority for compounding offences within two months of receiving the judgment. Such applications were to be considered with maximum empathy, leading to the imposition of the least penalty, subject to case-to-case evaluation, unless criminality was suspected or found. Furthermore, if offences were compounded, the companies could apply afresh in the prescribed 'NDH Form', which would be considered dispassionately, without being influenced by prior rejections. Any objections to these applications were not to be peremptory; instead, the companies were to be notified and given at least one month to rectify defects, with further opportunities for hearing and rectification if necessary. The Court also permitted the petitioners to raise their capital within the statutory threshold, with applications for this purpose to be acceded to, subject to other mandatory requirements. The interim order granted by the Court was to continue until the compounding and fresh application processes were completed.

The Tribunal held that there is no restriction in the Income Tax Act preventing the assessee from claiming the balance of the additional depreciation in the subsequent year. The High Court agreed with this view, relying on previous judgments.

The High Court directed the 3rd respondent (Commissioner of Income Tax (Appeals)) to decide the appeal challenging the assessment order finally. Crucially, the Court ordered that this decision be made without insisting on the payment of 20% of the disputed tax amount. The Court also mandated that the disposal of the appeal should be completed within a period of six months from the date of the judgment. Furthermore, the Court ordered that the recovery proceedings pursuant to the assessment order be kept in abeyance until the disposal of the appeal. The Court did not explicitly decide whether the subject matter was indeed covered by the cited judgments, but rather granted relief based on the petitioner's submission and the revenue's concession to decide the appeal expeditiously.

The High Court held in favour of the assessee on all substantial questions of law. Regarding the additional depreciation (issues 1 and 2), the Court agreed with the Tribunal's view that there is no restriction in the Income Tax Act preventing the balance of additional depreciation from being availed in a subsequent year. The Court relied on the judgments in Commissioner of Income-tax, Madurai v. T P Textiles (P) Ltd. and Commissioner of Income-tax, Bangalore v. Rittal India (P) Ltd., finding them directly on point and in full agreement. The Court also noted that a clarificatory amendment to Section 32(1)(ii) with effect from 01.10.2016 supported the assessee's claim. For the disallowance of investment in GPEL (issue 3), the Court followed its own previous judgment in Commissioner of Income-Tax v. Apollo Tyres Ltd. For the eligibility of DG Power Generation Units 1 and II for deduction under Section 80-IA (issues 4 and 5), the Court followed its reasoning and conclusion in ITA Nos. 69 and 70 of 2011, which had dismissed similar appeals filed by the Revenue. Consequently, all substantial questions of law were answered in favour of the assessee and against the Revenue.

The High Court noted that the assessee had availed the remedy under the Vivad se Vishwas Scheme and did not intend to prosecute the appeal. Consequently, the assessee's counsel requested that the statement be placed on record and the appeal be withdrawn. The Court accepted this submission and passed an order dismissing the Income Tax Appeal as withdrawn. No decision on the merits of the original dispute was made.

The High Court held that the Tribunal was correct in allowing the balance 50% of additional depreciation in the subsequent year. The Court agreed with the assessee's reliance on the judgments in Commissioner of Income-tax, Madurai v. T P Textiles (P) Ltd. and Commissioner of Income-tax, Bangalore v. Rittal India (P) Ltd. The Court found these decisions to be directly on point and in full agreement with their reasoning and principles. The clarificatory amendment to Section 32(1)(ii) with effect from October 1, 2016, was also noted as supporting the assessee's deduction. Consequently, the substantial questions of law were answered against the Revenue and in favour of the assessee. No order as to costs was made.

The High Court followed its previous decisions in similar cases (ITA Nos. 69 and 70 of 2011) where appeals by the Revenue were dismissed. The court held that the DG Power Generation Unit was indeed an undertaking entitled to the benefits of Section 80-IA.

The High Court, by following the reasoning and conclusion recorded in its previous judgments in ITA Nos. 69 and 70 of 2011 concerning similar questions for Assessment Year 2002-03, answered the substantial questions of law in favour of the assessee and against the Revenue. The Court found that the DG Power Generation Units 1 and II were indeed eligible for the benefit of Section 80-IA. The ratio decidendi is that if the Court has already decided similar issues in prior appeals, it will apply the same reasoning to subsequent appeals with identical questions. The appeal filed by the Revenue was dismissed.

The High Court held that the appeal was not maintainable as its value was below the limit stipulated by the CBDT Circular. This decision was based on a Supreme Court judgment concerning similar appeals.

The High Court held that the substantial questions of law were answered in favour of the Revenue and against the Assessee. The Court adopted the reasoning from its earlier order in ITA No. 26/2013, which had dismissed the assessee's appeal for Assessment Year 2003-04 on similar grounds. Consequently, the appeal filed by M/s. Apollo Tyres Ltd. was dismissed. The disallowance of part depreciation on the Gurgaon building and the issue concerning club expenses were thus upheld in favour of the Revenue. No specific findings were detailed for each question in this judgment, but the overall dismissal indicates the Tribunal's decision on these matters was sustained. The operative direction was the dismissal of the appeal.

The Tribunal sustained the disallowance of part depreciation on the Gurgaon building and held that club expenses require proof of commercial expediency for allowance. The High Court adopted the reasoning from a previously dismissed appeal.

The High Court decided to consider only questions 3 and 4, which pertained to whether DG Power Generation Units I and II constituted an 'undertaking' under Section 80-IA and whether they were entitled to the benefits of that section. The Court noted that these questions were identical to those raised by the Revenue in ITA Nos. 69/2011 and 70/2011 for Assessment Year 2002-03. The Revenue's appeals in those cases were dismissed on February 27, 2019. By following the reasoning and conclusions of this Court in the aforementioned prior judgments, the substantial questions of law (questions 3 and 4) were answered in favour of the assessee and against the Revenue. The appeal was dismissed. No order as to costs was made. Questions 1 and 2 were not decided as they were not pressed.

The High Court held that the Tribunal was right in annulling the reopening proceedings and setting aside the order of the CIT (Appeals). This decision was reached by following the High Court's own judgment dated February 27, 2019, in ITA Nos. 41 and 60/2011. The reasoning is that the substantial question of law framed at the time of admission of the appeal, which related to the merits of the assessee's claim under Section 80-1A, was answered in favour of the assessee and against the Revenue. The principle established is that if prior appeals on the same issue of reopening have been dismissed, subsequent appeals challenging the same annulment will also be dismissed. The appeal filed by the Revenue stands dismissed.

The Tribunal held that the DG Power Generation Units I and II qualified as an 'undertaking' for the purpose of Section 80-IA. The High Court followed its previous judgment on similar appeals for the same assessee and assessment year.

The Tribunal held that the expenditure on showroom equipment was capital in nature as the ownership remained with the assessee, setting aside the CIT(A)'s order. The High Court agreed with the Tribunal's reasoning.

The High Court of Kerala disposed of the writ petition with specific directions. The Court acknowledged that stay petitions filed by the petitioner in their statutory appeals against the assessment orders for the years 2017-2018 and 2018-2019 were pending. Consequently, the third respondent, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, was directed to decide these stay petitions within a period of four months from the date of communication of the judgment. Furthermore, the Court ordered that until the disposal of the stay petitions, the respondents shall keep the recovery of the amounts assessed as per the assessment orders for the years 2017-2018 and 2018-2019 in abeyance. The petitioner was also directed to cooperate with the third respondent for the expeditious disposal of the stay petitions. No issue was expressly left undecided; the court provided a procedural resolution.

The Tribunal correctly allowed the deduction of bonus payments, following a previous judgment between the parties. It also correctly allowed the write-off of advances for revenue items as current expenses under Section 37, despite the Assessing Officer's disallowance under Section 36.

The High Court noted that the Supreme Court in S.C. Naregal v Commissioner of Income Tax had dismissed appeals falling within the ambit of the CBDT Circular. Applying this precedent, the High Court held the present appeal was not maintainable.

The High Court held that the substantial questions of law were answered in favour of the Revenue and against the Assessee. The Court adopted the reasons provided in a separate order concerning ITA No. 26/2013 for Assessment Year 2003-04, which dealt with similar questions of law. Consequently, the appeal filed by the Assessee was dismissed. The specific reasoning for each issue, as elaborated in the separate order for AY 2003-04, would have led to the conclusion that the showroom expenditure was capital in nature due to ownership retention and that the disallowance of depreciation on the let-out portion of the Gurgaon building was justified. The ratio decidendi would be that expenditures on dealer showrooms where ownership is retained are capital, and depreciation on let-out portions can be disallowed under specific circumstances. No issue was expressly left undecided.

The High Court of Kerala, by following its previous judgment dated February 27, 2019, in ITA Nos. 41 and 69 of 2011, which dealt with similar substantial questions of law for assessment years 2001-02 and 2002-03, answered the questions in favour of the assessee and against the Revenue. The Court held that the reopening proceedings were illegal, aligning with the Tribunal's decision. The reasoning is based on the precedent set by the Court in the earlier appeals, where similar issues were decided in favour of the assessee. The ratio decidendi is that if reopening is based on a mere change of opinion without the assessee failing to disclose material facts, it is invalid. The appeal filed by the Revenue was dismissed. No issue was expressly left undecided.

The High Court dismissed the appeals filed by the assessees, noting their statement that they had availed the 'Vivad se Vishwas' scheme and did not wish to prosecute the appeals. The Court also dismissed the appeals filed by the Revenue. The dismissal was granted with liberty to both the assessee(s) and the Revenue to file a petition for recalling the order if the assessee(s) could not avail the benefit of the settlement, failed to deposit the stipulated amount, or if the object of the 'Vivad se Vishwas' scheme was obliterated. This conditional dismissal was to protect the interests of both parties, acknowledging the developments during the pendency of the appeals. The operative direction was the dismissal of all appeals with liberty to seek recall.

The High Court noted that the assessee(s) had availed the option to settle the disputes under the 'Vivad se Vishwas' scheme and consequently did not wish to prosecute their appeals. Based on this statement, the Court dismissed the appeals filed by the assessee(s). Subsequently, considering the assessee's settlement under the 'Vivad se Vishwas' scheme, the appeals filed by the Revenue were also dismissed. The Court granted liberty to both the assessee(s) and the Revenue to file a petition for recalling the order if the assessee(s) could not avail the benefit of settlement or failed to deposit the stipulated amount, allowing them to have their respective appeals heard on merit. The operative direction was the dismissal of all appeals with liberty to recall.

The High Court held that the appeal is not maintainable. The reasoning was based on the fact that the valuation of the subject appeal was less than the limit stipulated by the CBDT Circular. The Court relied on the Supreme Court's judgment in S.C. Naregal (supra), which considered the effect of CBDT Circulars and dismissed appeals falling within their purview. Consequently, the appeal was dismissed as not maintainable. No specific issue was left undecided.

The High Court dismissed the appeals filed by the assessee(s) as they no longer wished to prosecute them due to opting for the 'Vivad se Vishwas' scheme. Similarly, the appeals filed by the Revenue were also dismissed.

The High Court held that simultaneous deductions under Section 80HHC and Section 80-IB are impermissible, and the deduction under Section 80-IB must be excluded when computing the deduction under Section 80HHC. The activity of sterilizing and packing purchased gloves was not considered 'manufacture' for Section 80-IB.