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 MONDAY, THE 25TH FEBRUARY 2008 / 6TH PHALGUNA 1929 ITA.No. 209 of 2002() --------------------- ITA.318/COCH/1998 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: -------------------------------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: APPELLANT: ----------------------- M/S. INDIAN NUT PRODUCTS, KOLLAM. BY ADV. SRI.P.BALACHANDRAN SMT.PREETHA S.NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25/02/2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & T.R. RAMACHANDRAN NAIR, JJ. -------------------------------------------- I.T.A. No. 209 OF 2002 -------------------------------------------- Dated this the 25th day of February, 2008 JUDGMENT C.N. Ramachandran Nair,J. Heard standing counsel appearing for the appellant and Sri. P. Balachandran, senior counsel appearing for the respondent. Following are the three questions raised by the appellant-revenue as questions arising from the order of the Tribunal: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law and in fact in granting deduction for a sum of Rs. 1,19,737/- incurred as legal expenditure? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding the miscellaneous income from the total turnover for the purpose of computation of deduction under Section 80HHC? 3. Whether on the facts and in the circumstances of the case, should not the Tribunal have considered the legal issue namely" the loss arrived at under sub-section 3 could be deducted from the positive figure under the proviso to sub-section 3 of Section 80HHC and is not the order vitiated for the failure of the Tribunal to consider the same? 2 We find from the Tribunal's order that the Tribunal has allowed legal charges following the decision of the Supreme Court in MEENAKSHI MILL's case, 63 I.T.R 207. We do not find any difference in this case, even though standing counsel contended that legal expenses were incurred for litigation against taking over of a leased factory by the Government. We therefore reject the appeal pertaining to the first question. Second question, we feel cannot be decided by us because the nature and break-up details of miscellaneous expenses accounted by the assessee are not on record. Unless these details are furnished, it is not possible to decide whether the amount represents part of "total turnover" for the purpose of computation of relief under Section 80HHC. While standing counsel relied on the decision of the Supreme Court in CIT V. K. RAVINDRANATHAN NAIR, 295 ITR 228, counsel for the assessee relied on the Supreme Court decision in CIT V. LAKSHMI MACHINE WORKS, 290 ITR 667. Since details are not available, we set aside the Tribunal's order on this issue and remand the matter to the Assessing Officer for reconsideration after verifying 3 the nature of transaction that led to miscellaneous expenses with reference to the decisions above cited. The last question is admittedly covered against the assessee vide decision of the Supreme Court in IPCA LABORATORY LTD. V. DY.CIT, 266 I.T.R. 521(SC). We therefore allow the departmental appeal on this last question referred by reversing the order of the Tribunal and restoring the assessment. The assessing officer will redo the assessment to the extent required in terms of the directions contained above. (C.N.RAMACHANDRAN NAIR) Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk 4