Kerala High Court
The Kerala Minerals And Metals Ltd vs The Principal Commissioner Of Income ... on 23 August, 2025
Author: A.Muhamed Mustaque
Bench: A.Muhamed Mustaque
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ITA No.56 of 2024 2025:KER:63689
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE
&
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
SATURDAY, THE 23RD DAY OF AUGUST 2025 / 1ST BHADRA, 1947
ITA NO.56 OF 2024
APPELLANT/APPELLANT/ASSESSEE:
THE KERALA MINERALS AND METALS LTD.,
SANKARAMANGALAM CHAVARA, KOLLAM DIST.,
KERALA, 691001 [PAN:AAACT8118R],
REPRESENTED BY MANAGING DIRECTOR PRADEEP KUMAR P.
BY ADV.SMT.PREETHA S. NAIR
BY SRI.SUKM SAGAR SYAL
RESPONDENT/RESPONDENT/RESPONDENT:
THE PRINCIPAL COMMISSIONER OF INCOME TAX,
AYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM,
KERALA, PIN - 695003.
BY ADVS.
SRI.P.G.JAYASHANKAR
SRI.G.KEERTHIVAS
SHRI.NAVANEETH N. NATH, CGC
THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19.08.2025, THE
COURT ON 23.08.2025 DELIVERED THE FOLLOWING:
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ITA No.56 of 2024 2025:KER:63689
JUDGMENT
Harisankar V. Menon, J.
The appeal, at the instance of the assessee, seeks to challenge
Annexure F order dated 28.03.2024 in ITA No.96/Coch/2024 of the
Income Tax Appellate Tribunal, upholding the refusal to extend
interest on the refund eligible to it.
2. While filing its return of income for the assessment year
2004-05 (financial year 2003-04), the appellant-assessee sought for
a deduction of Rs.20,17,74,600/-, representing arrears of
salary/wages to its employees for the period from 2001 to 2004. By
Annexure A order dated 29.12.2006, the assessing authority
processed the afore claim, refusing to extend the deduction sought
for, recording as under:-
"The objection is considered. The company follows mercantile
system of accounting. The liability for this payment of wage arrears
are not provided in the accounts for the year 31/03/2004. The
Company says that the issue was in an advanced stage of
negotiation. The Company could have provided for such a liability.
If the wage revisions on the basis of Government orders, then such
liability can be possibly considered on the basis of crystallisation of
liability. In this case the liability was quantified in June 2004 ie.
outside the previous year relevant to assessment year 2004-05.
The claim cannot be allowed this year. It is relevant to mention that
ITA No.56 of 2024 2025:KER:63689
the liability towards wage revision amounting to 3.46 cores has
been claimed by the assessee on the basis of Government order
dated 23/04/2003 and has been allowed."
(Underlining supplied)
The challenge to disallowance as above before the appellate
authorities was unsuccessful, and when the matter was carried in
appeal before this Court, by a judgment dated 08.06.2009 in ITA
No.97 of 2009, a Division Bench of this Court upheld the disallowance
and dismissed the appeal. However, this Court held that since the
appellant was under the control of the Government of Kerala and since
the Government granted approval for settlement with the employees
only on 17.06.2024 - during the financial year 2004-05 - the claim is
to be raised and allowed during the assessment year 2005-06. Hence,
the appellant-assessee was permitted to move for rectification/other
remedies so as to claim benefits subsequently.
3. On the afore basis, the appellant-assessee raised a claim for
the assessment year 2005-06 through a rectification application. By
Annexure C order dated 02.09.2010, the rectification application was
acted upon and the assessment for the year 2005-06 was modified
deducting an amount of Rs. 20,17,74,600/- from the total income on
account of which the appellant became entitled to certain refund -
ITA No.56 of 2024 2025:KER:63689
Rs.9,15,24,268/- after making some adjustments as regards certain
dues of the appellant. On the afore amount of refund, the appellant
was found entitled to interest for the period from September, 2009
(the month succeeding the month in which the application for
rectification was filed) till October, 2010 (the month in which
rectification was carried out).
4. Insofar as the interest was only granted as above, an
appeal was preferred seeking the grant of interest from April, 2005
onwards, and the first appellate authority upheld the award of interest
as above, however, issuing certain minor directions for statistical
reasons.
5. The further appeal to the Appellate Tribunal is rejected by
the impugned order dated 28.03.2024, leading to the captioned
appeal.
6. We have heard Sri.Sukm Sagar Syal, the learned counsel
for the appellant-assessee, and Sri.P.G.Jayashankar, the learned
Standing Counsel for the respondent.
7. The claim made by the appellant-assessee in the case at
ITA No.56 of 2024 2025:KER:63689
hand is processed under Section 244A of the Income Tax Act, 1961
(hereinafter referred to as the "Act"). Sub-section (2) thereof provides
as under:-
"(2) If the proceedings resulting in the refund are delayed for
reasons attributable to the assessee or the deductor, as the
case may be, whether wholly or in part, the period of the delay
so attributable to him shall be excluded from the period for
which interest is payable under sub-section (1) or (1A) or (1B),
and where any question arises as to the period to be excluded,
it shall be decided by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner
whose decision thereon shall be final."
As regards the entitlement for refund under Section 244A of the Act,
there is no dispute. The question for consideration is whether the
provisions of sub-section (2) are applicable.
8. Sub-section (2) of Section 244A of the Act provides for the
exclusion of the period of delay attributable to the assessee, whether
wholly or in part. The assessing authority, in the case at hand, has
stated that the question of refund has arisen only pursuant to the
judgment dated 08.06.2009 in ITA No.97 of 2009 of the Division
Bench of this Court, on the basis of which, an application for
rectification was presented during August, 2009. It is the
sustainability or otherwise of the afore conclusion, that found favour
ITA No.56 of 2024 2025:KER:63689
with the appellate authorities, including the Appellate Tribunal, that
arises for consideration herein.
9. As already noticed, for the assessment year 2005-06,
originally in the return filed, there was no such claim made by the
appellant-assessee. Instead, the appellant sought a deduction for the
assessment year 2004-05. However, the claim was disallowed for
the assessment year 2004-05 as early as on 29.12.2006. The
assessing authority in Annexure A order for the assessment year
2004-05 has categorically found that the claim actually falls under the
subsequent year. In other words, the assessee ought to have made
amendments with respect to its return for 2005-06 at least with
reference to that date. Instead of doing that, it challenged the
assessment before the appellate authorities, and it is only pursuant
to the judgment of the Division Bench on 08.06.2009 in ITA No.97 of
2009 that the appellant-assessee chose to make an appropriate claim
for the assessment year 2005-06.
10. True, learned counsel for the appellant-assessee
contended that since it had challenged the assessment for the year
2004-05, it could not seek for the benefits during the later year.
ITA No.56 of 2024 2025:KER:63689
However, even in such a situation, in our opinion, the appellant-
assessee could have raised a claim for the later year (2005-06) with
specific reference to the observations in the assessment order for the
year 2004-05; without prejudice to the contentions in the appeal for
the assessment year 2004-05. However, the assessee has not chosen
to avail the afore course of action.
11. We may also notice that the question of refund has arisen
for the first time only in August, 2009, when the appellant-assessee
sought for the benefits by instituting a rectification application. Till
such time, a consequential order is passed on the afore application,
the retention of the tax which was later found to be paid in excess,
was perfectly legal. For that reason also, we are of the opinion that
the period excluded while calculating the interest eligibility of the
appellant-assessee cannot be said to be incorrect or arbitrary.
12. The learned counsel for the appellant-assessee also sought
to rely on the judgment of this Court in Commissioner of Income
Tax v. South Indian Bank Ltd. [(2012) 340 ITR 574 (Ker)] in
support of his contention. However, we notice that in the said case
claim for refund was raised on the basis of a revised return filed on
ITA No.56 of 2024 2025:KER:63689
10.01.2001, which was found to be in the course of assessment prior
to the completion of assessment. This Court found that there was no
delay on the part of the assessee, since the assessment proceedings
were going on and the claim was made during such proceedings. But,
in the case at hand, there is no dispute that the original return did not
contain any such claim, and even when the assessment for the year
2005-06 was completed, this was never an issue arising for
consideration. As already found, the claim arises for the first time only
pursuant to the directions of this Court in the appeal against the
assessment year 2004-05. Hence, the assessee would not be entitled
to rely on the afore decision in support of its contentions.
13. On the whole, we are of the opinion that the findings of the
Appellate Tribunal were in tune with the provisions of the Act, and
there is no infirmity in the impugned order.
In the result, the appeal would stand dismissed.
Sd/-
A.MUHAMED MUSTAQUE, JUDGE
Sd/-
HARISANKAR V. MENON, JUDGE
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ITA No.56 of 2024 2025:KER:63689
PETITIONER'S ANNEXURES:
ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED
29.12.2006.
ANNEXURE B TRUE COPY OF THE ORDER OF THE HONOURABLE HIGH
COURT DATED 8.6.2009 ITA NO 97/2009.
ANNEXURE C TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER
U/S.154 DATED 2.9.2010.
ANNEXURE D TRUE COPY OF THE LETTER OF THE ASSESSEE DATED
3.12.2021 TO THE COMMISSIONER OF INCOME TAX
(APPEALS).
ANNEXURE E TRUE COPY OF THE ORDER OF THE CIT(A)
DT.24.12.2021.
ANNEXURE F CERTIFIED COPY OF THE ORDER OF THE ITA TRIBUNAL
DT.28.3.2024 IN ITA NO 96/COCH/2022
