The Thirumbadi Rubber Company Limited V. Inspecting Asst. Commissioner(Special), Kozhikode and State of Kerala, Rep: Commissioner of Commercial Taxes, Thiruvananthapuram and Assistant Commissioner of Income Tax, Circle 1(1), Ernakulam and Commissioner of Income Tax, Ernakulam

OTC/10/2010

AI Insights

The case involves The Thirumbadi Rubber Company Limited, which appealed against the decision of the Kerala Sales Tax Appellate Tribunal that upheld the limitation of re-plantation expenditure to 2.5% of the total agricultural income. The company argued that the expenditure should not be confined to this percentage, referencing a Supreme Court decision in M/s.Assam Company Limited v. State of Assam, which dealt with the computation of agricultural income by state authorities. However, the court distinguished this case from the Assam Company case, emphasizing that the limitation on re-plantation expenditure was a specific rule under the Kerala Agricultural Income Tax Rules, 1991, which was not challenged in the appeal.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 689905 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 17-07-2018
• Assessment Year: misc
• Other Referred Cases: M/s.Assam Company Limited and Another etc. v. State of Assam and Others - [2001] 9 KTR 504 (SC)
• Laws Referred To: Kerala Agricultural Income Tax Rules, 1991, Income Tax Act, 1961, Kerala Agricultural Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: V K SHAMSUDDIN
• Assessee Lawyers: P RAGHUNATH; PREMJIT NAGENDRAN
• Keywords: Agricultural income-tax; Assessment Order; Re-plantation expenditure; Income apportionment
• Section: 3

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 17TH DAY OF JULY 2018 / 26TH ASHADHA, 1940 OTC.No. 10 of 2010 AGAINST THE ORDER/JUDGMENT IN AITA 12/2009 of KERALA SALES TAX APPELLATE TRIBUNAL,ADDL.BENCH,KZD. DATED 10-09-2009 PETITIONER(S)/APPELLANT THE THIRUMBADI RUBBER COMPANY LIMITED, THIRUMBADI ESTATE, MUKKAM.P.O, KOZHIKODE-673 602,, REP:BY AUTHORISED SIGNATORY BY ADVS.SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENT(S):/STATE 1. INSPECTING ASST.COMMISSIONER(SPECIAL), KOZHIKODE. 2. STATE OF KERALA, REP: COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. *ADDL.R3 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), ERNAKULAM. *ADDL.R4 COMMISSIONER OF INCOME TAX, ERNAKULAM *(ADDITIONAL R3 & R4 ARE IMPLEADED AS PER ORDER DATED 11.7.2011 IN OTC 10/2010) BY SRI.V.K.SHAMSUDDIN, SR.GOVERNMENT PLEADER THIS OTHER TAX CASES HAVING BEEN FINALLY HEARD ON 17-07-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OTC 10/2010 APPENDIX PETITIONER'S EXHIBITS ANNEXURE-I : COPY OF ASSESSMENT ORDER FOR 2003-04 DATED 21.7.2004. ANNEXURE-II : COPY OF FIRST APPELLATE ORDER DATED 10.12.2008. ANNEXURE-III : COPY OF ORDER OF THE APPELLATE TRIBUNAL IN AITA NO.12/2009 DATED 10.9.2009. //TRUE COPY// PS TO JUDGE. jg-20/7 K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- O.T.C.No.10 of 2010 ------------------------------------------- Dated this the 17th day of July, 2018 J U D G M E N T Vinod Chandran, J. The assessee-Company is before this Court claiming re-plantation expenditure to the full extent not confined to 2.5% as provided under Rule 3 of the Kerala Agricultural Income Tax Rules, 1991. The assessee carries on plantations and the specific assessment is with respect to the rubber plantations. The assessee as per the Income Tax Rules, 1962 which provides for apportionment of income between the Central and State Governments, has conceded 35% of the income before the income tax authorities; wherein a determination was made of the total income apportioning 35% towards the Income Tax Act and the balance 65% was assessable under the Kerala Agricultural Income Tax Act by the officers of the State. The question of law raised is as follows:- Whether the Tribunal was correct in having upheld the order of the assessing authority limiting the allowance of expenditure for re-plantation to 2.5% of the total agricultural income, especially in the OTC 10/10 -2- context of the decision in M/s.Assam Company Limited and Another etc. v. State of Assam and Others - [2001] 9 KTR 504 (SC)? 2. M/s.Assam Company Ltd. was in the context of the State authorities having proceeded to determine the total income under the State Agricultural Income Tax Act. The Honourable Supreme Court held that the States cannot recompute agricultural income in divergence from the computation by the Central Officers. Hence, when the Central Officers under the Income Tax Act compute the income and assess it to the extent of 35%, the balance as per the computation being 65% has to be accepted by the Officers of the State, to which extent alone the agricultural income tax can be levied. We do not think that the aforesaid decision has any application in the present case, since here the question is as to the expenditure for re-plantation being limited to 2.5% of the total agricultural income. 3. Allowance was limited only as per the provisions of the Kerala Agricultural Income Tax Rules specifically Rule 3(1), which is not challenged herein. The authorities under the enactment are bound by the Rules and hence, there could be no challenge raised to OTC 10/10 -3- such limit having been applied without a challenge to the Rules. We were also apprehensive on how the assessee could claim re-plantation expenditure under the Agricultural Income Tax Act, especially when the same has been claimed and allowed fully under the Income Tax Act. There cannot be an expenditure claimed twice under the very same income, especially when only 35% was assessed by the Central officers and 65% assessed by the State Officers. We are also fortified in taking such a view by the decision of this Court in OTC No.11/2013 dated 27.7.2017. This question however does not arise since there is no appeal from the State. We, hence answer the question of law framed against the assessee and in favour of the Revenue and dismiss the OTC. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE jg "