The Commissioner Of Income-Tax vs English Indian Clays Ltd on 18 March, 2009

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

ITA.No. 91 of 2008()


1. THE COMMISSIONER OF INCOME-TAX
                      ...  Petitioner

                        Vs



1. ENGLISH INDIAN CLAYS LTD.,
                       ...       Respondent

                For Petitioner  :SRI.GEORGE K. GEORGE, SC FOR IT

                For Respondent  :SRI.A.KUMAR

The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice K.SURENDRA MOHAN

 Dated :18/03/2009

 O R D E R
                 C .N. RAMACHANDRAN NAIR &
                    K. SURENDRA MOHAN, JJ.
                 --------------------------------------------
                       I.T. A. No. 91 OF 2008
                 --------------------------------------------
                Dated this the 18th day of March, 2009

                              JUDGMENT

Ramachandran Nair,J.

Of the two questions raised in the appeal, one pertains to

disallowance of dividend paid to other shareholder companies and the

other pertains to assessee’s claim for higher rate of depreciation on

certain items. Dividend was admittedly not paid before the due date for

filing returns as required under Section 80M. However, the first

appellate authority and the Tribunal allowed the claim on the ground

that the Annual General Body meeting was held and dividend was

declared before the due date for filing returns. The Tribunal gave a

further finding that assessee credited the accounts of the shareholder

companies with dividend amount before filing returns. Senior standing

counsel appearing for the appellant relied on the decision in DELHI

TOURISM AND TDC LTD. V. COMMISSIONER OF INCOME TAX

(2006) 285 I.T.R. 114 (Delhi.) and contended that a mere resolution

2

declaring dividend is not sufficient to allow the claim. Even though

declaration of dividend is not sufficient for entitling deduction, the

finding of the Tribunal is that shareholder companies’ accounts have

been credited with the dividend amount before the due date for filing

returns and in fact dividend cheques have been released immediately

after filing of the returns. However, on going through the Tribunal’s

order we do not think Tribunal has verified the records before entering

these facts. In any case, since Tribunal has not referred to the dates on

which credit entries were made in the accounts of the shareholder

companies and the dates on which cheques were released to them, we

feel, verification is required with regard to facts found by the Tribunal

in favour of the respondent. The assessee’s claim for higher rate of

depreciation stands remanded to the assessing officer for

reconsideration based on the certificate produced before the first

appellate authority. It is not known whether revised orders are issued

pursuant to remand. In any case, since Tribunal has not given the dates

on which the assessee has credited the dividend amount and the dates

of release of payment to the shareholder companies, we remand this

3

issue also to the assessing officer for factual verification. However, we

make it clear that if the accounts of the shareholder companies have

been credited with dividend amount before the due date for filing

returns and if shortly after filing of the returns dividend is paid to the

shareholder companies, then the assessing officer will allow the claim.

On the other hand, if credits have not been given before the due date

for filing returns or if payments are not released shortly after filing

returns, then the assessing officer will disallow the claim.

Appeal is disposed of by modifying the order of the Tribunal to

the above extent.

(C.N.RAMACHANDRAN NAIR)
Judge.

(K. SURENDRA MOHAN)
Judge.

kk

4