Allowed

M/S. Punalur Paper Mills Limited v. Commissioner of Income Tax

Kerala HC7 Feb 2019ITA/150/2012

Case brief

AI extract

What is this about?

The High Court held that business expenses of a defunct company can be set off against other income under Section 14 despite no business operations, reversing the Tribunal. However, carry forward of loss was denied without business income.

What did the court decide?

Reversed the Tribunal order to set off business expenses against other income; disallowed carry forward of loss.

M/S. Punalur Paper Mills Limited Vs Commissioner of Income Tax — Income Tax | Kerala HC (2019)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

¶4

¶5

THE HONOURABLE MR. JUSTICE ASHOK MENON

¶6

THURSDAY, THE 07TH DAY OF FEBRUARY 2019 / 18TH MAGHA, 1940

¶7

I.T.A.No.150 of 2012

¶8

AGAINST THE ORDER IN ITA 177/COCH/2010 OF I.T.A.TRIBUNAL, COCHIN BENCH, COCHIN DATED 03.04.2012. [ASSESSMENT YEAR 2005-06]

¶9

APPELLANT/RESPONDENT:

¶10

M/S.PUNALUR PAPER MILLS LIMITED, PUNALUR, KOLLAM DISTRICT, KOLLAM-691 332.

¶11

BY ADVS. SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.)

¶12

RESPONDENT/APPELLANT:

¶13

COMMISSIONER OF INCOME TAX, KAWDIAR, THIRUVANANTHAPURAM, PIN CODE 695 003.

¶14

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

¶15

THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA.150 of 2012

- 2 -

JUDGMENT

Vinod Chandran,J.

¶20

The issue arising in this appeal has already been decided by us in a batch of appeals of the very same assessee. The question arising in this appeal by the assessee is whether the allowance under Sections 37 of the Income Tax Act, 1961 [for brevity "the Act"] were available for a company which had been defunct for almost 24 years, in the years in which there were no operations. The issue is of the business expenses claimed by the assessee for that year in which there was no use of assets by the assessee can be permitted? The Tribunal took a different stand in the present year from the earlier stand and disallowed the business expenditure claimed for allowance against the income from other sources and capital gains. We have already held that the business expenses of a particular year can be set off against any income under the various heads under Section 14 even if it is not income from profits and gains of business or profession. The fact that the assessee had not been generating any income from the business for reason of the factory having been closed down would not restrict the assessee from claiming the expenditure for the particular previous year to be set off

¶21

ITA.150 of 2012 - 3 -

¶22

against the other income. Hence, we reverse the order of the Tribunal to that extent following our judgment of this date in a batch of cases in I.T.A.No.1423 of 2009 and connected cases. However, we make it clear that as held by us in the said decision, there can be no carry forward business loss set off or claimed in the relevant previous year; for the purpose of set off against the income from other source or capital gain. The assessing officer shall reconsider the issue in the light of our findings and the assessee shall establish the various amounts claimed as being rightly expended for the purpose of business.

¶23

The appeal would stand allowed, leaving the parties to suffer their respective costs.

¶24

Sd/-

¶25

K.VINOD CHANDRAN JUDGE

¶26

Sd/ASHOK MENON JUDGE

- 4 -

ITA.150 of 2012

APPENDIX

APPELLANT'S ANNEXURES:

¶31

ANNEXURE A	TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING DATED 02/05/2002 BETWEEN GOVERNMENT OF KERALA AND THE APPELLANT.
ANNEXURE B	TRUE COPY OF THE ASSESSMENT ORDER DATED 30/11/2007 FOR THE YEAR 2005-06 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX TO THE APPELLANT.
ANNEXURE C	TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 03/11/2009 ISSUED TO THE APPELLANT.
ANNEXURE D	TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 19/08/2004 ISSUED TO THE APPELLANT.
ANNEXURE E	TRUE COPY OF THE DEBT RECOVERY TRIBUNAL'S ORDER IN THE CASE OF KOTAK MAHINDRA BANK VS. PUNALUR PAPER MILLS IN RP.76/2005 DATED 16/04/2010.
ANNEXURE F	A TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING DATED 27/02/2011 BETWEEN GOVERNMENT OF KERALA AND THE APPELLANT.
ANNEXURE G	TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 03/04/2012 ISSUED TO THE APPELLANT.
ANNEXURE - H	TRUE COPY OF THE TRIBUNAL'S ORDER DATED 19/07/2011 FOR THE ASSESSMENT YEAR 2004-05 ISSUED IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, KOLLAM VS. PUNALUR PAPER MILLS LTD.
ANNEXURE I	TRUE COPY OF THE ORDER OF THE ADDITIONAL COMMISSIONER OF INCOME TAX, KOLLAM DATED 06/09/2012 TO THE APPELLANT.
Vku/-

¶32

[ true copy ]

M/S. Punalur Paper Mills Limited v. Commissioner of Income Tax

Case brief

What is this about?

What did the court decide?

M/S. Punalur Paper Mills Limited v. Commissioner of Income Tax

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

Coram

Case details

Similar cases

Dhivya Mohan, Vs the Commerial Tax Officer

Husky Injection Molding Systems (India) Private Limited Vs the Commissioner of State Tax

The Commissioner of Income Tax, Vs Sud Chemie India Ltd.

The Commissioner of Income Tax, Vs Punalur Paper Mills

M/S. Bpl Telecom (P) Ltd. Vs State of Kerala

The Commissioner of Income Tax Vs Kerala State Construction Corporation Ltd.