IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 9TH MARCH 2010 / 18TH PHALGUNA 1931 WP(C).No. 32975 of 2009(N) ----------------------------------------- PETITIONER(S): ------------------------- P.C.CHACKO, MANAGING PARTNER, P.C.CHACKO & COMPANY, CHACKO TOWERS, CIVIL LINE ROAD, PALARIVATTOM, COCHIN-682 025. BY ADV. MR.PREMJIT NAGENDRAN RESPONDENT(S): ---------------------------- 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(2), ERNAKULAM. 2. COCHIN STOCK EXCHANGE, BANERJI ROAD, NEAR INDIAN EXPRESS, KOCHI-682 017. R1 BY ADV. MR.JOSE JOSEPH, SC, INCOME TAX R2 BY ADV. MR.KOSHY GEORGE THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09/03/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss P.R.RAMACHANDRA MENON, J --------------------------- W.P(C) No.32975 of 2009-N ---------------------------- Dated this the 9th day of March, 2010. J U D G M E N T The petitioner is aggrieved of Ext.P8 order passed by the first respondent whereby the deduction claimed by the assessee/petitioner as 'revenue expenditure' in respect of the building fund contribution has been disallowed, stating that same is a 'capital expenditure'. The case put forth by the petitioner is that Ext.P8 order has been passed by the first respondent without any regard to the clear mandate given by this Court as per Ext.P6 judgment. 2. The sequence of events narrated in the Writ Petition shows that the basic issue to be considered is whether the contribution effected by the petitioner towards the building fund of the second respondent, being a member of the second respondent, is liable to be treated as 'capital expenditure' or 'revenue expenditure'. When the proceedings were finalized earlier, whereby the petitioner was given the benefit as per the orders passed by the W.P(C) No.32975 of 2009-N 2 first appellate authority, the Department took up the matter before the Tribunal, where the finding was reversed; which in turn happened to be challenged before this Court by filing appeal under Section 260A of the Income Tax Act. It was the specific case of the petitioner that the petitioner was not in a position to implead the second respondent/stock exchange before the Department/ statutory authorities so as to establish the case put forth by the petitioner in so far as the property itself had already disposed of because of the frustrating pecuniary circumstances of the stock exchange and hence the contribution to the building fund was to be reckoned as expenses as claimed. Pointing out the facts and circumstances, the petitioner had also filed I.A No.1289 of 2003 along with an affidavit in support thereof in I.T.A 35 of 2003 before this Court and it was accordingly, that Ext.P6 judgment was passed by this Court, holding that, in view of the subsequent developments, it was a matter to be considered by the Assessing authority and consequential directions were also given. 3. Pursuant to Ext.P6, the matter was considered by the first respondent; whereby the claim was disallowed and the W.P(C) No.32975 of 2009-N 3 expenditure was treated as 'capital expenditure'. The case of the petitioner is that absolutely no discussion has been made by the said respondent in Ext.P8 as to the specific contention put forth by the petitioner with reference to the sale of the land by the second respondent and as to the non-liability of the enduring benefit. No discussion is made also with regard to the course of events as referred to in para 3 of Ext.P6 judgment. It is also the specific case of the petitioner that the assessing authority is very much having necessary power to summon the second respondent/stock exchange and to pass appropriate orders in this regard. 4. This Court finds that there is considerable force in the submission made by the learned counsel for the petitioner and the matter has not been finalized by the first respondent in tune with the direction given by this Court, particularly taking note of the observations made in para 3 thereunder. In the said circumstances, Ext.P8 is set aside and the first respondent is directed to re- consider the matter with specific reference to the observations in para 3 of Ext.P6 judgment and also in the light of the stand taken by the second respondent before this Court. The proceedings shall be W.P(C) No.32975 of 2009-N 4 finalized as above, after issuing notice to the petitioner as well as the second respondent herein, as expeditiously as possible, at any rate within two months from the date of receipt of a copy of this judgment. The Writ Petition is disposed of. Sd/- P.R.RAMACHANDRA MENON JUDGE //True Copy// P.A to Judge ab W.P(C) No.32975 of 2009-N 5