COMMISSIONER OF INCOME TAX COCHIN versus MIS TRAVANCORE COCHIN UDYOGA MANDAL

Citation: [2017] 7 S.C.R. 551 · Decided: 17-08-2017 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2017] 7 S.C.R. 551 
COMMISSIONER OF INCOME TAX COCHIN 
v. 
MIS TRAVANCORE COCHIN UDYOGA MANDAL 
(Civil Appeal No. 2015 of2007) 
AUGUST 17,2017 
[R.K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.( 
Income Tax Act, 1961 - Deduction of lease rent - Claim for -
A 
B 
In the instant case, by order dated 2 5. 06.1988, State Government 
fixed lease rent of demised land payable by respondent-assessee to 
C 
the State Government - Respondent objected to the fixation of lease 
rent - By order dated 7.11.1991, State Government rejected the 
respondents objection - Claim for deduction in respect of lease 
rent for assessment year 1992-93 -Entitlement-Held: The questions 
which arose for consideration were as to whether the fixation of 
rent and its payment was statutory or contractual and, !f so, its 
D 
effect while claiming deduction under the Act and, if so, in which 
year of assessment - These are mixed questions of law and fact - In 
view of nature of issue involved, it is held just and proper to remand 
· the case to Tribunal for deciding the issue a.fresh on merits. 
Allowing the appeal, the Court 
HELD : 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 
E 
so, in which year of assessment is a mixed question of law and 
F 
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 G 
appeal, for the first time for want of factual material and legal 
issues attached to it. 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 
551 
H 
552 
SUPREME COURT REPORTS 
[2017] 7 S.C.R. 
A 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, 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 
B 
c 
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. [Paras 14-161 
[555-F-H; 556-A-B] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2015 
of2007. 
From the Judgment and final Order dated 20-05-2005 passed by 
the High Court of Judicature of Kerala at Ernakulam in ITA No. 166 of 
2000. 
D 
K. Radhakrishna, Sr. Adv., Rupesh Kumar, Arijit Prasad, Adv. 
E 
F 
G 
H 
(for Ms.AnHKatiyar) for the Appellant. 
Ritin Rai, Jayant Malik, Gautam Jha, Ad vs. for the Respondent. 
The Judgment of the Court was delivered by 
ABHAY MANO HAR SAPRE, J. l. This appeal is filed by the 
Revenue against the final judgment and order dated 20.05.2005 passed 
by the High Court of Judicature of Kerala at Ernakulam in ITA No. 166 
of 2000 whereby the High Court dismissed the appeal filed by the 
appellant herein holding that the claim for deduction of lease rent made 
by the respondent ( assessee) in their Income Tax Return is allowable in 
that assessment year wherein the dispute relating to lease rent has attained 
finality and not in the assessment year wherein the lease rent was fixed 
by the Government. 
2. Few facts need to be mentioned infra to appreciate the short 
controversy involved in the appeal. 
3. The respondent is an assessee under the Income Tax Act. The 
State Government, in the year 1965, acquired the land measuring 46. 79 .250 
acres in Varapuzha Village (now Eloor Village) of Parur Taluk, District 
Ernakulum. Out of the acquired land, the State allotted 43.45.250 acres 
of land to the respondent for setting up of the factory. 
COMMR. OF INCOME TAX COCHIN v. MIS TRAVANCORE 
553 
COCHIN UDYOGA MANDAL [ABHAY MANOHAR SAPRE, J.] 
4. By order (G.O. Ms. 576/88/RD) dated 25.06.1988, (Annexure-
A 
P-1), the State Government fixed the lease rent of the demised land 
payable by the respondent to the State. The res

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