IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 18TH MARCH 2009 / 27TH PHALGUNA 1930 OTC.No. 3 of 2007() ------------------- AITA.6/2004 of AGRL.I.T.ADDL.BENCH,KOZHIKODE .................... PETITIONER/APPELLANT/RESPONDENT: -------------------- STATE OF KERALA, REP. BY JOINT COMMISSIONER(LAW)IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM. BY SPL. G.P. SRI.VINOD CHANDRAN RESPONDENT(S): --------------- M.P.ABDUL NAZAR,THOUFEEQUE MANZIL, PALAZHI ROAD,P.O POTTAMMAL,CALICUT-10. ADV. SRI.N.MURALEEDHARAN NAIR FOR R1 SMT.K.HYMAVATHY FOR R THIS OTHER TAX CASES HAVING BEEN FINALLY HEARD ON 18/03/2009,ALONG WITH OTC NO.4 OF 2007 & OTC NO.7 OF 2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... O.T.C. Nos.3,4 & 7 of 2007 .................................................................... Dated this the 18th day of March, 2009. JUDGMENT Ramachandran Nair, J. The question raised is whether the Tribunal was justified in cancelling 10% disallowance of expenditure sustained in first appeal by the appellate authority without any appeal or cross-appeal by the respondent-assessee. Agricultural income tax assessments involved are for 1997-98, 1998-99 and 1999-2000. Among other things the assessee challenged in first appeal disallowance of 25% of the expenditure made by the assessing authority in the original assessments. The first appellate authority allowed the claim in part by sustaining the disallowance at 10% of the expenditure. Even though department challenged the order on this issue also in appeals filed before the Tribunal, the assessee did not file any appeal or cross-appeal against the order of the first appellate authority sustaining disallowance of 10% expenditure. However, on department appeal against granting part relief, the Tribunal cancelled the entire disallowance. In other 2 words, the 10% disallowance of expenditure sustained in first appeal and accepted by the assessee was interfered with by the Tribunal. In these O.T.C. cases filed by the State, State has raised the contention that Tribunal has no jurisdiction to grant relief to the assesseee in appeals filed by the State. We do not think this question should be considered in these cases because otherwise also the order of the Tribunal is not tenable because they have not given any reason for interfering with the order of the first appellate authority sustaining 10% disallowance of the expenditure claimed. We, therefore, allow these cases by reversing the order of the Tribunal with regard to cancellation of 10% disallowance of the expenditure sustained by the first appellate authority and restore the order of the first appellate authority pertaining to 10% disallowance of expenditure sustained by it. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms