IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 23RD JANUARY 2008 / 3RD MAGHA 1929 OTC.No. 37 of 2005() -------------------- AITA.20/2003 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... : PETITIONER --------------------------- PLANTATION CORPORATION OF KERALA LIMITED, KOTTAYAM. BY ADV. SRI.JOSEPH MARKOSE RESPONDENTS: ------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SHRI K.P. PRADEEP THIS OTHER TAX CASES HAVING BEEN FINALLY HEARD ON 23/01/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N. Ramachandran Nair & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - - O.T.C.NO.37 of 2005 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 23rd day of January, 2008. JUDGMENT C.N. Ramachandran Nair, J. This Tax Revision Case filed by the petitioner which is a Government of Kerala Company, is against the order of the Agricultural Income Tax Appellate Tribunal modifying the assessment for the assessment year 1998- 99. 2. We have heard Shri Joseph Markose, learned Senior Counsel appearing for the petitioner and learned Govt. Pleader appearing for the respondent. 3. The first issue raised is against assessment on the amount refunded to the petitioner as excess plantation tax. The Tribunal sustained the assessment under Section 4(2)(ii) of the Agricultural Income Tax Act. If the plantation tax ordered to be refunded to the petitioner was allowed as a deduction in any of the preceding years, then the order of the Tribunal sustaining the assessment is perfectly justified. However, learned counsel for the petitioner has raised a contention that deduction claimed and allowed, was only in respect of the liability of plantation tax accepted by OTC 37/2005 -2- the petitioner and not what was demanded. The Tribunal has assumed that the petitioner had claimed deduction of the entire plantation tax demanded and paid and the same was fully allowed as deduction in earlier years. 4. Learned Govt. Pleader, on the other hand, submitted that since the petitioner is following mercantile system of accounting, deduction would have been claimed and allowed based on demand and therefore, when refund is ordered, the same has to be assessed. We do not know how the petitioner segregated between admitted liability and disputed liability and claimed only the actual amount payable by it. This is against normal practice of claiming deduction based on demand under mercantile system of accounting followed. In any case, since the petitioner is a Government company and since the amount involved is substantial, we grant an opportunity to the petitioner to produce documents to show that the payments were made from out of tax suffered income to prove that any second assessment would lead to duplication of assessment of the same income. If, on verification the assessing officer finds that the amount refunded was allowed as deduction in any of the preceding year or years, then the assessment confirmed by the Tribunal will stand sustained. On the other hand, if the assessee is found to have made full payments but claimed deduction of only part of the amount demanded and the amount was included in the total income, then it is already a tax suffered income on OTC 37/2005 -3- which, further tax is not payable. If that be the case, the assessing officer will exclude the differential amount from the computation of income for this year. 5. The next question raised is against disallowance of increased lease rental claimed by the petitioner. According to the petitioner, the Government increased lease rentals for the land leased to the company. However, it is conceded that the petitioner represented against the increase in lease rentals and even as of now, the Government has not finalised the claim. Therefore, obviously there was no enforcible claim made by the Government against the petitioner. The petitioner being a Government company, should treat the additional lease rental as a liability only when the Government turns down its request against increase and when specific enforceable demand is raised against the petitioner. 7. In view of the petitioner's representation against the demand and since the demand is not enforced by the Government in the course of the last nine years, we find no ground to interfere with the Tribunal's order confirming disallowance. However, we leave it open to the petitioner to make the claim as and when its request is turned down by the Government OTC 37/2005 -4- and when specific demands are raised against them. The tax revision case is disposed of as above. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/ OTC 37/2005 -5- . Ramachandran Nair & & T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - . No. - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 10th January, 2008.