Revenue ITA filed under Section 260A challenging ITAT order regarding Section 80 HHC deductions. Court declined to entertain appeal due to five-year delay and inaction by the Revenue, citing prejudice to the assessee.
Appeal dismissed; liberty granted to Revenue for review or application before the Tribunal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT :
THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU &
THE HONOURABLE MR. JUSTICE A.K.BASHEER
TUESDAY, THE 5TH AUGUST 2008 / 14TH SRAVANA 1930
ITA.No. 56 of 2008
------------------------------(ORDER DATED 30-6-2003 IN I.T.A.No.52/COCH/2000 & CO.No.14/COCH/2000 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH (ASSESSMENT YEAR 1994-95)
APPELLANT/RESPONDENT:
THE COMMISSIONER OF INCOME - TAX, THIRUVANANTHAPURAM.
BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT
RESPONDENT/APPELLANT:
M/S.BABA CASHEW INDUSTRIES, MANGAD, KOLLAM.
THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 05/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
H.L.DATTU, C.J. & A.K.BASHEER, J.
I.T.A.No.56 of 2008
Dated, this the 5th day of August, 2008
JUDGMENT
H.L.Dattu, C.J.
The Revenue is before us in this appeal filed under Section 260A of the Income-tax Act, inter alia, questioning the correctness or otherwise of the orders passed by the Income Tax Appellate Tribunal in ITA No.52/2000 and Cross Objection No.14/2000 dated 30-6-2003.
return filed by the assessee for the assessment year 1994-1995 was belated. Therefore, notice under section 148 was served to the assessee and assessment was completed determining total income at Rs.10,17,310/- restricting the claim of deduction under section 80 HHC of the Income Tax Act to Rs.7,40,978/- as against Rs.14,69,685/claimed by the assessee. The assessee's contention that processing charges received by it is non-business in nature was not accepted and also 90% of processing charges was excluded from profits of the business. The negative profit in respect of trading goods was also not allowed to be set off against positive elements in other limbs of
I.T.A.No.56 of 2008
-2-
computation of deduction under section 80 HHC.
I.T.A.No.56 of 2008
-3-
deduction under section 80 HHC, the Tribunal relying upon its own decision in Dy.CIT Vs. Shri.B.Mohanachandran Nair (ITA Nos.236,237, 238 of 1998 dated 21-6-2003) has decided the issue in favour of the assessee. Aggrieved by the order of the Tribunal, the Revenue has preferred this appeal.
law for our consideration and consequent decision. They are:-
“1. Whether, on the facts and in the circumstances of the case while completing the relief under section 80 HHC of the Income Tax Act, the processing charges could be excluded from the turnover of the business?
2. Whether, on the facts and in the circumstances of the case, and in view of Explanation (ba) to Section 80 HHC and clauses (iiia), (iiib) and (iiic) of section 28, will not turnover take into account all other receipts other than the excluded items of receipts?
3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that set off of negative profits against positive elements is permissible in
I.T.A.No.56 of 2008
-4-
computing deduction under section 80 HHC of the Income Tax Act?
November, 2003 and since the Registry had pointed out certain defects in filing the appeal and since they were cured only in the year 2008, the appeal is now posted before us for admission.
dismissed the Revenue's cross objection by an order passed in the month of June, 2003. Nearly after five years from the date of the order, if we have to issue notice to the respondent only because, the Revenue was not diligent in prosecuting the appeal filed in the year 2003, in our view, it could cause great prejudice and injustice to the assessee/respondent.
I.T.A.No.56 of 2008
-5-
liberty to the Revenue to make an appropriate application/review petition before the tribunal for appropriate orders..
Ordered accordingly.
(H.L.DATTU) CHIEF JUSTICE
(A.K.BASHEER) JUDGE
MS
3 issues framed by the court
Whether processing charges can be excluded from turnover while computing relief under section 80 HHC.
Whether set off of negative profits against positive elements is permissible under section 80 HHC.
Whether the High Court should entertain the appeal given the inordinate delay in prosecuting it.
Colour shows how this judgement treated each authority
CIT Vs. K.Raveendranathan NairReferred¶30
CIT Vs. K.Raveendranathan Nair (I.T.A.No.72 of 2000 dated 13-2-2003)
Dy.CIT Vs. Shri.B.Mohanachandran NairReferred¶30
Dy.CIT Vs. Shri.B.Mohanachandran Nair (ITA Nos.236,237, 238 of 1998 dated 21-6-2003)
2 provisions across 1 enactments
THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM
M/S.BABA CASHEW INDUSTRIES, MANGAD, KOLLAM
H.L.DATTU
A.K.BASHEER
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
