M/S.Kerala Transport Co. vs The Commr. Of Income Tax on 26 May, 2008

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

ITA.No. 186 of 2000()



1. M/S.KERALA TRANSPORT CO.,Y.M.C.A.ROAD,
                      ...  Petitioner

                        Vs

1. THE COMMR. OF INCOME TAX, CALICUT
                       ...       Respondent

                For Petitioner  :SRI.C.KOCHUNNY NAIR

                For Respondent  :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT

The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN

 Dated :26/05/2008

 O R D E R
                       C.N.RAMACHANDRAN NAIR &
                                  V.K.MOHANAN, JJ.
                  ....................................................................
                             I.T. Appeal No.186 of 2000
                  ....................................................................
                    Dated this the 26th day of May, 2008.

                                         JUDGMENT

Ramachandran Nair, J.

The question raised in the appeal filed by the assessee is whether the

Tribunal was justified in disallowing the loss claimed amounting to

Rs.2,19,565/-.

2. The assessee was engaged in tyre retreading mainly for it’s own

purpose and it has done business for a sister concern. The sister concern

was charged for the tyre retreading work at below the cost price which led

to a loss of Rs.2,19,565/-. The assessee claimed set off of this loss against

it’s income. The Assessing Officer rejected the same and made addition of

the claim of loss. Even though C.I.T.(Appeal) allowed, the Tribunal

reversed the first appellate order and restored the addition. It is against this

order of the Tribunal that the assessee has come up before this court in the

appeal filed under Section 260A of the Income Tax Act.

3. We do not think the claim is tenable because on facts the Tribunal

found that the assessee was charging rates at below the cost price for

retreading tyres for the sister concern. In fact assessee’s activity itself is not

2

business activity and it is only doing a service to the sister concern. The

financial result is assessee’s own choice in as much as assessee chose to

sustain loss by charging below the cost price. We do not think the assessee

is entitled to any benefit of it’s own device to avoid tax. In view of the

clearcut finding by the Tribunal that assessee has charged it’s sister concern

below the cost price which is a loss disallowable, we do not find any ground

to interfere with the order of the Tribunal. Consequently we dismiss the

appeal.

C.N.RAMACHANDRAN NAIR
Judge

V.K.MOHANAN
Judge
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