Case: Commissioner Of Income Tax, Cochin Vs. M/S. Travancore Cochin

was not permissible for them to claim in future Assessment Year (1992-93). It was without any legal basis. 8. The respondent, felt aggrieved, carried the matter in second appeal before the Tribunal. By order dated 13.09.1999, the Tribunal allowed the respondents appeal and set side the orders of assessing authority and CIT (appeal). It was held that since the respondent was following the mercantile system of accountancy and the liability in relation to the rent in question though accrued in 1989-90 was in dispute before the State Government, the same could be claimed only in that Assessment Year wherein the dispute was settled by the State. It was noted that the dispute was settled by the State Government by rejecting the respondents prayer to revise the rent on 07.11.1991. The deduction in respect of lease rent therefore could be claimed in the Assessment Year 1992-93. The Tribunal accordingly allowed the deduction claimed by the respondent in the Assessment Year 1992-93 9. The Revenue, felt aggrieved, filed appeal before the High Court. By impugned order, the High Court dismissed the Revenues appeal and affirmed the order of the Tribunal, giving rise to filing of the appeal by the Revenue. 10. Heard Mr. K. Radhakrishnan, learned senior counsel for the appellant and Mr. Ritin Rai, learned counsel for the respondent. 11. Mr. K. Radhakrishnan, learned counsel for the appellant (Revenue) while assailing the legality and correctness of the impugned order contended that the liability in regard to fixation of lease rent by the respondent to the State was essentially a statutory liability because according to learned counsel it was determined, fixed, payable and lastly recoverable under the Kerala Land Assignment Act, 1960 (hereinafter referred to as "the Act") read with two Rules framed in exercise of powers conferred under Sections 3 and 7 of the Act called, "The Kerala Land Assignment Rules 1964" and "The Rules for Assignment of Government Land for Industrial Purposes" (hereinafter referred to as "the Rules"). It was, therefore, his submission that since the liability to determine, fix, pay and recover the lease rent is a statutory in nature and secondly, the respondent is following mercantile system of accountancy in their business for paying the taxes, the liability to pay such dues once accrued, which in this case was accrued on 25.06.1988, the deduction could be claimed in the same Assessment Year, i.e., 1989-90. Learned counsel urged that since the respondent failed to claim the deduction in the Assessment Year 1989-90, they had no right to claim such deduction in any subsequent assessment year much less in Assessment Year 1992-93. Learned counsel then referred extensively to the provisions of "The Act" and "The Rules" to show that the fixation of the rent is statutory and not contractual. 12. In reply, learned counsel for the respondent (assessee) supported the impugned order and contended that it does not call for any interference. It was also his submission that the argument now being raised by the learned counsel for the appellant in the appeal was never raised by them at any stage of the proceedings in Courts below and hence either it should not be entertained or if entertained, the same cannot be answered either way unless the respondent is given an opportunity to rebut it with reference to documents with a view to show that the fixation of rent is contractual and not statutory as contended by the Revenue. According to the learned counsel, this being a mixed question of fact and law it can be decided in first instance either by the CIT or Tribunal. 13. Having heard the learned counsel for the parties at length and on perusal of the record of the case, we are of the view that having regard to the nature of issue involved which is a mixed question of law and fact, it would be just and proper to remand the case to the Tribunal for deciding the issue afresh on merits. 14. The need to remand the case to the Tribunal, has occasioned because firstly, the question as to whether the fixation of rent and its payment is statutory or contractual and, if so, its effect while claiming deduction under the Income Tax Act and, if so, in which year of assessment is a mixed question of law and fact. Secondly, it was neither decided by any of the authorities below and nor by the Tribunal and the High Court. It may be that since the Revenue itself did not raise it before the authorities below and raised it for the first time before this Court by simply placing reliance on the provisions of the Act and the two Rules mentioned above, this Court cannot decide the same in this appeal, for the first time for want of factual material and legal issues attached to it. 15. In our considered opinion, in order to decide the issue of deduction, the nature of fixation of rent, its payment, recovery etc. and whether it is statutory or contractual, has some bearing over the question. It is also clear that the respondent did not get any chance to meet this submission before the courts/authorities below. It is for these reasons, we are of the view that the matter needs to be remanded to the Tribunal for its proper adjudication. 16. The Tribunal being the last adjudicatory authority in hierarchy on facts would be in a better position to decide the issue after taking into account the documents filed by the parties in support of their respective contentions. Depending upon the decision of the Tribunal, the parties can carry the matter to the higher Courts. 17. We, therefore, at this stage refrain from expressing any opinion on the merits of the case and nor consider it proper to record any finding on the submissions urged either way except to record the submissions of the parties for appreciating the issues urged and leave it to the Tribunal to decide, its applicability and relevancy in accordance with law.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. Having heard the learned counsel for the parties at length and on perusal of the record of the case, we are of the view that having regard to the nature of issue involved which is a mixed question of law and fact, it would be just and proper to remand the case to the Tribunal for deciding the issue afresh on merits.The need to remand the case to the Tribunal, has occasioned because firstly, the question as to whether the fixation of rent and its payment is statutory or contractual and, if so, its effect while claiming deduction under the Income Tax Act and, if so, in which year of assessment is a mixed question of law and fact. Secondly, it was neither decided by any of the authorities below and nor by the Tribunal and the High Court. It may be that since the Revenue itself did not raise it before the authorities below and raised it for the first time before this Court by simply placing reliance on the provisions of the Act and the two Rules mentioned above, this Court cannot decide the same in this appeal, for the first time for want of factual material and legal issues attached to it.In our considered opinion, in order to decide the issue of deduction, the nature of fixation of rent, its payment, recovery etc. and whether it is statutory or contractual, has some bearing over the question. It is also clear that the respondent did not get any chance to meet this submission before the courts/authorities below. It is for these reasons, we are of the view that the matter needs to be remanded to the Tribunal for its proper adjudication.The Tribunal being the last adjudicatory authority in hierarchy on facts would be in a better position to decide the issue after taking into account the documents filed by the parties in support of their respective contentions. Depending upon the decision of the Tribunal, the parties can carry the matter to the higher Courts.We, therefore, at this stage refrain from expressing any opinion on the merits of the case and nor consider it proper to record any finding on the submissions urged either way except to record the submissions of the parties for appreciating the issues urged and leave it to the Tribunal to decide, its applicability and relevancy in accordance with law.