KERALA STATE BEVERAGES(MANUFACTORING AND MARKETING)CORPORATION LIMITED Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Income Tax Appeal Nos. 135/2019 and 146/2019 are filed challenging a common order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA Nos.536/Coch/2018 and 537/Coch/2018, dated 12-03-2019. Income Tax Appeal No.313/2019 is filed against the revised order passed by the same Tribunal ITA No.537/Coch/2018, dated 11-10-2019. The assessee was the appellant before the Tribunal, who is the appellant herein. The revenue is the respondent.

(2.) Appellant is a company registered under the Companies Act , engaged in wholesale and retail trade of beaverages within the State of Kerala, and is a 'State Government Undertaking' falling within the 'Explanation' provided under Section 40 (a) (iib) of the Income Tax Act , 1961 (hereinafter referred to as 'the Act' for short). With respect to the assessment year 2014-2015, the Deputy Commissioner of Income Tax, Circle-2 (1), Thiruvananthapuram finalized the assessment of income tax against the appellant, under Section 143 (3) of the Act, through the order of assessment dated 14- 12-2016. But, the Principal Commissioner of Income Tax, Thiruvananthapuram initiated proceedings under Section 263 of the Act and set aside the order of assessment, on holding that the same is erroneous and is prejudicial to the interest of the revenue, to the extent it failed to disallow the debits made in the Profit and Loss Account of the assessee with respect to the amount of surcharge on sales tax and turn over tax paid to the State Government, which ought to have been disallowed under Section 40 (a) (iib) of the Act. Against order of the Principal Commissioner of Income Tax, issued under Section 263 of the Act, dated 25-09-2018, the appellant approached the Tribunal in ITA No.536/Coch/2018.

(3.) With respect to the assessment year 2015-2016, assessment against the appellant was completed under Section 143 (3) of the Act by the Assistant Commissioner of Income Tax, Circle-1 (1), Thiruvananthapuram, through the order of assessment, dated 28-12-2017. Debits contained in the Profit and Loss Account of the appellant with respect to payment of Gallonage Fee, Licence fee, Shop rental (Kist) and Surcharge on Sales Tax, amounting to a total sum of Rs.811,90,88,115/- was disallowed under Section 40 (a) (iib). Aggrieved by the said order the appellant approached the Commissioner of Income Tax (Appeals), Thiruvananthapuram. But the first appellate authority had dismissed the appeal. The appellant took up the matter in second appeal before the Tribunal in ITA No.537/Coch/2018.