THE COMMISSIONER OF INCOME TAX, COCHIN V. M/S.KERALA AGRO MACHINERY, CORPN LTD

ITA/75/2000

AI Insights

The case involves an appeal by the Commissioner of Income-Tax, Cochin against M/s. Kerala Agro Machinery Corporation Ltd. concerning the allowance of service charges paid to the Government as business expenditure for the assessment year 1992-1993. The Income Tax Appellate Tribunal had initially allowed the claim based on a previous order. However, due to divergent views on similar matters by different benches of the Tribunal, the High Court had earlier remanded the matter for fresh consideration. The current appeal was heard in conjunction with a related case (ITA No.70/00), which was also remanded to the Tribunal. The High Court found that not all relevant services and their impacts on the business expenditure claim were adequately considered and thus remanded the case back to the Tribunal for a detailed examination.

• Counselvise Citation: [2006] 140 COUNSELVISE.COM (IT) 728571 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 07-11-2006
• Assessment Year: misc
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Assessee Lawyers: P K R M MENON; GEORGE K GEORGE
• Keywords: Income tax appeal; Income tax appellate tribunal; Service charges; Allowable Business Expenditure

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 7TH NOVEMBER 2006 / 16TH KARTHIKA 1928 ITA.No. 75 of 2000 ------------------------- ITA.827/COCH/1995 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: ------------------------------------ THE COMMISSIONER OF INCOME-TAX, COCHIN. BY ADV. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT/RESPONDENT: ----------------------------------------- M/S. KERALA AGRO MACHINERY CORPORATION LTD. ATHANI - 683 585. (NO REPRESENTATION) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/11/2006, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C. N. RAMACHANDRAN NAIR & K. M. JOSEPH, JJ. -------------------------------------------- I.T. APPEAL NO.75 OF 2000 -------------------------------------------- Dated this the 7th day of November, 2006 JUDGMENT C. N. Ramachandran Nair, J. Even though notice was served on respondent/assessee, there is no appearance. Therefore, we proceed to hear the standing counsel for appellant and dispose of the Appeal. 2. Question raised in this Appeal filed against the order of the Income Tax Appellate Tribunal disposing of the Income Tax Appeal for 1992 - 1993, is whether the payments made by assessee to Government as service charges for services rendered by Government to the Company is an allowable business expenditure. Tribunal, following another order, allowed the claim. Moreover, the appeal was disposed of along with the appeal by assessee for the year 1991 - 1992 against which I.T.A. No.70/00 was filed in this Court. Standing Counsel produced ITA 75/00 2 common Judgment of this Court in ITR No.20/98 and connected cases which include ITA No.70/00 which was filed against the very same common order of Tribunal, under challenge in this appeal. This Court found that different Benches of the Tribunal with co-ordinate jurisdiction have taken divergent views in the matter. The cases were accordingly disposed of with a direction to the Tribunal to re-consider the matter afresh. It is not known whether the matter was heard or disposed of by tribunal again. In any case, since the connected case ITA No.70/00 is remanded to the Tribunal, and since the Tribunal has not considered the facts relevant for this case separately, we feel this case also should be remanded. We find from the first appellate authority's order that various services rendered by Government through its Agricultural Department which promotes sales of power tiller manufactured by respondent/assessee are considered. However, other services rendered, like ITA 75/00 3 Government nominees managing the affairs of the Company by being members of the Board, Government incentives given to the agriculture sector through subsidies, loans etc. for modernisation of the agriculture sector which promotes sale of power tiller manufactured by petitioner are not seen considered in detail. In such circumstances, we set aside the order of Tribunal and remand the matter back to the Tribunal for re- consideration. We make it clear that the Tribunal should give fresh opportunity to the assessee to furnish more details pertained to detailed service rendered by Government for which the Company has paid service charges based on the demand by Government. Tribunal is directed to dispose of the appeal along with connected appeals, if not already disposed of. If the Tribunal has already disposed of other Appeals without considering relevant aspects mentioned above, then they will ITA 75/00 4 dispose of this appeal separately with reference to the observations mentioned above. The I.T. Appeal is disposed of as above. C. N. RAMACHANDRAN NAIR, JUDGE K. M. JOSEPH, JUDGE kbk. C. N. RAMACHANDRAN NAIR & K. M. JOSEPH, JJ. I.T.APPEAL NO.75 OF 2000 JUDGMENT 7th November, 2006 "