Kerala High Court
The Commissioner Of Income Tax vs Island Hotel Maharaj Pvt.Ltd on 11 October, 2007
Author: Antony Dominic
Bench: Antony Dominic
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE ANTONY DOMINIC
&
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
MONDAY, THE 5TH DAY OF SEPTEMBER 2016/14TH BHADRA, 1938
ITA.No. 1126 of 2009 ( )
-------------------------
AGAINST THE ORDER/JUDGMENT IN ITA 159(COCH)/2005 of
I.T.A.TRIBUNAL,COCHIN BENCH DATED 11-10-2007
APPELLANT(S)/APPELLANT:
-------------------------------
THE COMMISSIONER OF INCOME TAX, COCHIN.
BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI (TAXES)
SRI.JOSE JOSEPH, SC, FOR INCOME TAX
RESPONDENT(S):
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ISLAND HOTEL MAHARAJ PVT.LTD.,
WILLINGDON ISLAND,COCHIN-682 003.
R,R BY ADV. SRI.V.P.NARAYANAN
R,R BY ADV. SRI.T.M.SREEDHARAN
R,R BY ADV. SMT.C.K.SHERIN
THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON
05-09-2016, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
ITA.No. 1126 of 2009 ( )
: 2 :
APPENDIX
PETITIONER'S ANNEXURES:
ANNEXURE A : COPY OF AGREEMENT DATED 10.03.1994 BETWEEN
'MAHARAJ' AND 'INDUS' (OBEROI GROUP).
ANNEXURE B : COPY OF ORDER U/S.143(3) DATED 24.01.2001 FOR THE
ASST. YEAR 1998-99.
ANNEXURE C : COPY OF ORDER DT. 15.10.2004 OF THE COMMISSIONER
OF INCOME TAX (APPEALS).
ANNEXURE D : COPY OF ORDER DATED 11.10.2007 OF THE INCOME TAX
APPELLATE TRIBUNAL, COCHIN BENCH IN ITA
NO.159/COCH/2005.
RESPONDENTS' ANNEXURES: NIL
//TRUE COPY//
P.A. TO JUDGE.
rv
ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ.
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I.T. Appeal No. 1126 of 2009
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Dated this the 5th day of September, 2016.
JUDGMENT
Antony Dominic,J.
This appeal is filed by the Revenue aggrieved by the order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. No. 159 (COCH) 2005 pertaining to the assessment year 1998- 1999.
2. We heard the learned Senior Counsel for the Revenue and the learned counsel appearing for the respondent assessee.
3. The questions of law framed for the consideration of this Court are the following:
1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee cannot be denied the benefit of carry forward of losses under Section 72 read with Section 80 of the I.T.Act as well as unabsorbed depreciation under Section 32 of the I.T. Act?
2. Whether, on the facts and in the circumstances of the case and also in view of the fact that the assessee did not produce books of accounts of the Bar Hotel/business pursuant to the notice under Section 142(1) before the Assessing Officer or before the appellate authority the Tribunal is right in relying on the submissions of the assessee and in holding that there is no cessation of business?
3. Whether on the facts and in the circumstances of the case and I.T. Appeal No. 1126/2009 -2- in the light of the finding of the Assessing Officer that "the annual licence fee for the Bar was to be paid by Indus" the Tribunal is right in law and fact in holding that " it is seen that the assessee has paid the bar licence fee" and is not the finding unsupported by any evidence and perverse?
4. Whether, on the facts and in the circumstances of the case and for the reason given by the Assessing Officer in the considered order the Tribunal is right in law and fact in interfering with the order of the Assessing Officer and is not the order of the Tribunal unsupported by evidence and materials?"
4. The issue that is required to be answered in this case is whether the Tribunal was justified in confirming the order passed by the Commissioner of Income Tax (Appeals) interfering with the order passed by the Assessing Officer disallowing the claim of loss for the year in question and that of brought forward losses. A reading of the assessment order itself shows that on the basis of the agreement entered into between the assessee and another company, investments were made in the assessee company and shares were also subscribed by new persons. The Assessing Officer has also referred to the fact that new Directors were also inducted into the Board of Directors of the assessee and that the entire character of the business of the assessee had undergone sea change. According to the Assessing Officer, during the said period building was demolished I.T. Appeal No. 1126/2009 -3- and a new project was under implementation. On these facts, the Assessing Officer concluded that there was cessation of business justifying disallowance of the claim of loss and that of carry forward losses. It was this order of the Assessing Officer which was set aside by the first appellate authority and confirmed by the Tribunal.
5. Although the learned Senior Counsel for the Revenue sought to impugn the findings of the first appellate authority and the Tribunal, we find that the assessee, a legal entity, despite the agreement that is referred to by the Assessing Officer and the inflow of external funds and changes in the share pattern and Board of Directors, continued to exist as a legal entity. It is also the admitted factual position that during the relevant year, FL-3 licence issued under the Foreign Liquor Rules was possessed by the assessee. Therefore, despite the renovation or reconstruction that was going on and the changes that have occurred in the structure of the company, it cannot be said that there was cessation of business disentitling the assessee for the benefits in question. Therefore, we do not find any reason to disagree with the order passed by the first appellate authority as confirmed by the Tribunal. According to us, in the above I.T. Appeal No. 1126/2009 -4- background, the order of the Tribunal does not give rise to any questions of law to be considered by this Court in this appeal filed under Section 260A of the Income Tax Act. Appeal fails and it is accordingly dismissed.
ANTONY DOMINIC, JUDGE.
DAMAJUDGE.
SESHADRI NAIDU, Rv I.T. Appeal No. 1126/2009 -5-