KERALA STATE BEVERAGES (M&M) CORPORATION LTD. V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1)

WA/437/2014

AI Insights

The case involves Kerala State Beverages (M&M) Corporation Limited appealing against the judgment related to the deductibility of surcharge and turnover tax from taxable income under Section 37 of the Income Tax Act. The taxes in question were paid under the Kerala Surcharge on Taxes Act, 1957, and the Kerala General Sales Tax Act, 1963. The assessing authority had ruled that the corporation, while not entitled to pass on these taxes to purchasers, was still liable to pay them. The legal controversy was pending before the appellate tribunal and the first appellate authority. The court's decision to require a 10% deposit of the disputed amount was influenced by the upcoming changes in the law effective from April 1, 2014, and the need to ensure a prompt resolution of the appeals.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 755788 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 14-03-2014
• Assessment Year: misc
• Laws Referred To: Kerala Surcharge on Taxes Act, 1957, Kerala General Sales Tax Act, 1963, Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: ANIL NAIR; SREEJITH NAIR; SULEKHA C S; ROSIE JOSEPH
• Keywords: Deduction from total income; Surcharge; Taxable income; Turnover Tax; Interim order of stay
• Section: 37; 40(ii)(b)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY , THE 14TH DAY OF MARCH 2014/23RD PHALGUNA, 1935 WA.No. 437 of 2014 () ----------------------------- AGAINST THE JUDGMENT DATED 25-02-2014 IN WP(C).NO. 5406/2014. ...... APPELLANT/APPELLANT: -------------------------------------- M/S.KERALA STATE BEVERAGES (M&M) CORPORATION LTD., P.B. 2263, SASTHAKRIPA OFFICE COMPLEX, SASTHAMANGALAM, THIRUVANANTHAPURAM. BY ADVS.SRI.ANIL D. NAIR, SRI. SREEJITH R.NAIR, SRI. SULEKHA BEEVI C.S., SRI. ROSIE ATHULYA JOSEPH. RESPONDENTS/RESPONDENTS: ------------------------------------------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TRIVANDRUM - 695 001. 2. THE INCOME TAX APPELLATE TRIBUNAL, COCHIN -682 018. BY SRI.P.K.R. MENON, SENIOR SC. ADV. SRI.JOSE JOSEPH, SC, INCOME TAX. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14-03-2014, ALONG WITH W.A. NO. 438 OF 2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. MANJULA CHELLUR, C.J & A.M.SHAFFIQUE, J. ---------------------------------------------- W.A. Nos. 437 of 2014 and 438 of 2014 ---------------------------------------------- Dated this the 14th March, 2014 JUDGMENT Manjula Chellur, C.J. Heard learned counsel for appellant Mr.Anil Nair and also learned senior standing counsel for income tax. 2. So far as Writ Appeal No. 437/2014 it pertains to assessment years 2009-2010 and 2010-2011 and Writ Appeal No.438/2014 pertains to assessment year 2011-2012. The appellant before us is Kerala State Beverages (M&M) Corporation Limited. 3. It is not in dispute that by virtue of incorporation of provision as per Section 40(ii) (b) it would come into effect from 1.4.2014. The same would have some impact on the controversy involved in this case. However, the controversial issue is pending consideration before the appellate tribunal and also first appellate authority. In these two appeals the issue is whether W.A. Nos. 437 of 2014 and 438 of 2014 2 surcharge paid by the petitioner under the Kerala Surcharge on Taxes Act, 1957 and also turnover tax paid in terms of provisions of Kerala General Sales Tax Act, 1963 are liable to be deducted from the total income as envisaged under Section 37 of the Income Tax Act while computing the taxable income. The assessing authority has opined that though the appellant Corporation is not entitled to pass on this burden to the purchasers, still is liable to pay. This issue is pending before two different appellate authorities as stated above. Meanwhile, learned single Judge, having regard to the total liability against the appellant-assessee was of the opinion, as the appellate authorities concerned have to decide the controversial issue pending before them, it would be just and proper to satisfy 40% of the outstanding liability in both the cases. According to appellant's counsel, in the absence of any certainty with regard to their liability to pay, it would be nothing but a huge uncomfortable burden on the assessee-Corporation to shell out said amount which ultimately may be found not liable to pay. Having regard to the amount involved and especially the additional provision which is going to be effective from 1.4.2014 which has to be interpreted, we are of the opinion, 10% of the W.A. Nos. 437 of 2014 and 438 of 2014 3 outstanding liability should be deposited to have the benefit of interim order of stay during pendency of the appeals pending before the concerned appellate authorities and the amount shall be paid on or before 31st of March. We also direct the concerned appellate authorities to dispose of the appeals on merits within three months from today. Sd/- MANJULA CHELLUR, CHIEF JUSTICE Sd/- A.M.SHAFFIQUE, JUDGE rka 15.3.14 /true copy/ "