High Court Of Madras
Tamil Nadu Warehousing Corporation vs. Assistant Commissioner Of Income Tax
Section 260A
Asst. Year 2003-04
K. Raviraja Pandian & P.P.S. Janarthana Raja, JJ.
Tax Case Appeal No. 1481 of 2008
24th September, 2008
Counsel Appeared :
N. Muthukumar, for the Appellant : Arun Kumar Joseph, for the Respondent
JUDGMENT
K. Raviraja Pandian, J. :
This appeal is filed against the order of the Tribunal, Madras “C” Bench, Chennai, dt. 14th May, 2008 passed in ITA No. 1204/Mad/2007.
The appellant is the Tamilnadu Warehousing Corporation established under the Warehousing Corporations Act, 1962, and is owned by the Government of Tamilnadu. The appellant is an assessee under the respondent. For the asst. yr. 2003-04, the assessee filed returns and claimed exemption under s. 10(29) of the IT Act, 1961, in respect of the income derived from the activities carried on by the assessee, and those are letting out various godowns and warehouses primarily to other Government corporations for storage, processing and marketing of commodities.
The said exemption was claimed on the premises that the appellant is an authority constituted under law for marketing of commodities and any income derived from letting out the godowns and warehouses for storage, processing or facilitating the marketing of the commodities, would qualify for exemption under s. 10(29) of the IT Act. The AO held that supplementary storage claim relating to earlier years raised in current assessment year cannot be excluded from taxable income and also added bad debt write off amount to the taxable income of the current assessment year.
The assessee carried the matter on appeal to the CIT(A), who by his order, allowed the appeal in part confirming the addition of Rs. 1,14,79,107 pertaining to the alleged prior period expenses and allowing the claim of bad debts made. The reason given by the CIT(A) is that the appellant is following the accrual system of accounting of its various incomes. As per the said method, the amount under consideration has actually accrued to the appellant in the current year and hence the contention of the appellant that the said amount pertains to earlier years cannot be sustained and it cannot be permitted to deviate from its accounting policy consistently followed in the earlier assessment year unless and until there are very exceptional circumstances for making the said change and rejected the contention of the appellant.
The appellant, aggrieved by the order of the CIT(A), went on further appeal to the Tribunal with a petition to condone the delay of 109 days in preferring the appeal. The reason for the delay stated by the appellant is that it was awaiting confirmation from its chartered accountant. The Tribunal, not satisfied with the reason stated dismissed the appeal. The assessee is before us, on appeal against the said order by formulating the following substantial questions of law :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting the application for condonation of delay amounting to 109 days ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in not admitting the appellant’s appeal and hearing the same on the merits ?”
We heard the arguments of the learned counsel for the appellant and perused the materials available on record. The appellant being a State owned corporation before filing an appeal against the IT Department, we are of the view has to obtain clearance from the Committee on Disputes (CoD). The apex Court, in the case of ONGC vs. City & Industrial Development Corporation (2007) 7 SCC 39, after referring to the earlier cases in ONGC vs. CCE (1992) Supp (2) SCC 432, ONGC vs. CCE (1995) Supp (4) SCC 541, ONGC vs. CCE (2004) 6 SCC 437, in which directions have been issued to set up Governmental committee to resolve the dispute between theintragovernmental or intergovernmental disputes involving Government Departments or Government owned companies of the Central and State Governments, rather than adjudicating the same before Courts of law, and having regard to the fact of the particular case, that the matter was pending since 1990 and considering the nature of the controversy, which is a recurring feature, directed that a committee be formed to sort out the differences between the Central Government and the State Government entities. The composition of such committee is also stated to be as follows :
The Cabinet Secretary of the Union; Chief Secretary of the State; Secretaries of the Departments concerned of the Union and the States; and Chief Executive, Officers of the undertakings concerned.
7. The Supreme Court in the case of Chief Conservator of Forests vs. Collector (2003) 3 SCC 472 has held as follows : “Disputes between Government Departments, cannot be contested in Court. State/Union of India must evolve a mechanism for resolving inter Departmental controversies. Constitution of committees suggested which should consist of Chief Secretary, Secretaries of the Departments concerned, Secretary of Law and Secretary of Finance (where financial commitments are involved) whose decision should be binding on all Departments concerned.”
8. The apex Court also held that it shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceed with. The same has been reiterated in the latest decision of the Supreme Court in the case of CIT vs. Oriental Insurance Co. Ltd. (2008) 217 CTR (SC) 593 : (2008) 10 DTR (SC) 113 : (2008) 304 ITR 55 (SC) in Civil Appeals Nos. 4529 of 2008, etc., decided on 18th July, 2008.
9. In order to discharge that obligation, when we posed a question to the learned counsel as to whether such a clearance has been obtained from the CoD, he admitted that such a certificate from the CoD, has not been obtained. Hence, the appeal is dismissed as not entertainable in the absence of the clearance, however, by giving liberty to the appellant to move this Court after obtaining clearance from the CoD. No costs.
[Citation : 328 ITR 280]
