Dismissed

The Commissioner of Income Tax, v. M/S.Cochin Refineries Ltd., Cochin

Kerala HC11 Dec 2018ITA/41/2002

Case brief

AI extract

What is this about?

The High Court dismissed three Income Tax Appeals filed by the Department against the Tribunal. The Court held that the Tribunal correctly set aside a rectification order under Section 154 due to change of opinion regarding carry forward of loss from an assessment year where return was filed late. Further, the Court noted that limitation for rectification under Section 154 had expired for the impu

What did the court decide?

Rectification order under Section 154 was set aside; department appeals rejected; no costs awarded.

The Commissioner of Income Tax, Vs M/S.Cochin Refineries Ltd… — Income Tax | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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THE HONOURABLE MR. JUSTICE ASHOK MENON

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TUESDAY ,THE 11TH DAY OF DECEMBER 2018 / 20TH AGRAHAYANA, 1940

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ITA.No. 41 of 2002

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AGAINST THE ORDER/JUDGMENT IN ITA 638(COCH)/1996 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 17-07-2001

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APPELLANT/S:/APPELLANT/REVENUE:

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THE COMMISSIONER OF INCOME TAX, COCHIN.

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BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR IT DEPT.

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RESPONDENT/S:/RESPONDENT/ASSESSEE:

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M/S.COCHIN REFINERIES LTD., AMBALAMUGAL.

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BY ADVS. SRI.P.BENNY THOMAS SRI.ANIL D. NAIR SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.RAJA KANNAN

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THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11.12.2018, ALONG WITH ITA.16/2002 AND ITA.49/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ITAs16, 41 & 49/2002

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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THE HONOURABLE MR. JUSTICE ASHOK MENON

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TUESDAY ,THE 11TH DAY OF DECEMBER 2018 / 20TH AGRAHAYANA, 1940

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ITA.No. 16 of 2002

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AGAINST THE ORDER/JUDGMENT IN ITA 637(COCH)/1996 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 17.7.2001

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APPELLANT/S:/APPELLANT/REVENUE:

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THE COMMISSIONER OF INCOME TAX, COCHIN.

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BY ADVS.

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SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR INCOME TAX DEPARTMENT

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RESPONDENT/S:/RESPONDENT/ASSESSEE:

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M/S.COCHIN REFINERIES LTD, AMBALAMUGAL.

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BY ADVS. SRI.P.BENNY THOMAS SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.RAJA KANNAN

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THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11.12.2018, ALONG WITH ITA.49/2002 AND ITA.41/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ITAs16, 41 & 49/2002

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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THE HONOURABLE MR. JUSTICE ASHOK MENON

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TUESDAY ,THE 11TH DAY OF DECEMBER 2018 / 20TH AGRAHAYANA, 1940

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ITA.No. 49 of 2002

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AGAINST THE ORDER/JUDGMENT IN ITA 639(COCH)/1996 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 17-07-2001

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APPELLANT/S:/APPELLANT/ASSESSEE:

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THE COMMISSIONER OF INCOME TAX, COCHIN.

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BY ADVS.

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SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR INCOME TAX DEPARTMENT.

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RESPONDENT/S:

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M/S.COCHIN REFINERIES LTD., AMBALAMUGAL.

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BY ADVS. SRI.P.BENNY THOMAS SRI.ANIL D. NAIR SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.RAJA KANNAN

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THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11.12.2018, ALONG WITH ITA.41/2002 AND ITA.16/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ITAs16, 41 & 49/2002

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K.VINOD CHANDRAN & ASHOK MENON, JJ.

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------------------------------------------ITA Nos.16, 41 and 49 of 2002 ------------------------------------------Dated this the 11^th day of December, 2018

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J U D G M E N T

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Vinod Chandran, J.

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The Department is in appeal from an order of the Income Tax Appellate Tribunal raising certain questions of law regarding the sustainability of the Tribunal's order setting aside the rectification under Section 154 of the Income Tax Act, 1961 ('Act', for short) merely on the ground of change of opinion. The assessment years are 1987-88, 1989-90 and 1990-91. The Tribunal, in fact, also took note of the earlier proceedings for the assessment year 1985-86, the loss in which year was the subject matter of rectification.

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On facts, it is to be noticed that the assessee had filed a return under Section 139(1) for the assessment year 1985-86 beyond the due date in September. The assessment was completed under Section 143(3), a scrutiny assessment, and the assessee was allowed carry forward of the loss of the said year. In fact, such carry

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ITAs16, 41 & 49/2002

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forward could not have been allowed, since the assessee had filed the return beyond the due date under Section 139(1). Section 80 under Chapter-VI prohibited such carry forward and set off of loss of years in which the assessee had failed to file the return within the time provided under Section 139(1).

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The subject assessment years in which the rectification was carried out, purportedly to refuse set off of the loss carried forward, of the year 1985-86, are the years 1987-88, 1989-90 and 1990-91. The carry forward of loss as permitted in the assessment year 1985-86 by an assessment completed under Section 143(3) remains as such. Without rectifying the order of the said year, there can be no refusal to permit set off for the subsequent years. Admittedly, the assessment of 1985-86 as completed under Section 143(3) remains as such and carry forward is hence permitted. There can be no rectification made for the said assessment year for the limitation having expired.

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Further, even in the subject assessment years, the limitation under Section 154 has expired. The notice as seen from the appeals and the rectification order was first issued on 04.12.1995. The four year period from the end of

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ITAs16, 41 & 49/2002

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the assessment years of 1987-88, 1989-90 and 1990-91 stands expired respectively on 31.03.1992, 31.03.1994 and 31.03.1995. All the proceedings were initiated beyond the four year period. In such circumstances, we refuse to answer the question regarding the change of opinion. We also uphold the order of the Tribunal setting aside the rectification under Section 154 for the subject assessment years. The I.T.Appeals are rejected. No costs.

Sd/-

K.VINOD CHANDRAN

JUDGE

Sd/-

ASHOK MENON

JUDGE

ITAs16, 41 & 49/2002

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APPENDIX OF ITA 41/2002

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APPELLANT'S EXHIBITS:

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ANNEXURE-A COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 27/02/89. ANNEXURE-B COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 06/09/1996. ANNEXURE-C COPY OF THE ORDER OF THE TRIBUNAL DATED 17/07/2001.

[True Copy]

ITAs16, 41 & 49/2002

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APPENDIX OF ITA 16/2002

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PETITIONER'S/S EXHIBITS:

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ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 27/02/1996. ANNEXURE-B COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 06/09/96. ANNEXURE-C TRUE COPY OF THE ORDER OF THE TRIBUNAL DATED 17/07/2001.

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ANNEXURE-D COPY OF THE ASSESSMENT ORDER FOR THE ASSISTANT YEAR 1985-86 DATED 19/02/1988.

[True Copy]

ITAs16, 41 & 49/2002

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APPENDIX OF ITA 49/2002

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PETITIONER'S/S EXHIBITS:

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[True Copy]

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The Commissioner of Income Tax, v. M/S.Cochin Refineries Ltd., Cochin

Case brief

What is this about?

What did the court decide?

The Commissioner of Income Tax, v. M/S.Cochin Refineries Ltd., Cochin

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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