M/S. Apollo Tyres Ltd vs The Principal Commissioner Of Income ...
2025 Latest Caselaw 10380 Ker

Kerala High Court

M/S. Apollo Tyres Ltd vs The Principal Commissioner Of Income ... on 31 October, 2025

Author: A.Muhamed Mustaque

Bench: A.Muhamed Mustaque

                                    1
ITA No.63 of 2024                                      2025:KER:82228


                 IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                 PRESENT

              THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE

                                    &

              THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON

     FRIDAY, THE 31ST DAY OF OCTOBER 2025 / 9TH KARTHIKA, 1947

                            ITA NO. 63 OF 2024


APPELLANT:

              M/S. APOLLO TYRES LTD.,
              3RD FLOOR, AREEKAL MANSION, NEAR MANORAMA JUNCTION,
              PANAMPILLY NAGAR, KOCHI PAN - AAACA6990Q, PIN - 682036.


              BY ADVS.
              SHRI.ABRAHAM JOSEPH MARKOS
              SRI.V.ABRAHAM MARKOS
              SRI.ISAAC THOMAS
              SHRI.ALEXANDER JOSEPH MARKOS
              SHRI.JOHN VITHAYATHIL
              SRI.P.G.CHANDAPILLAI ABRAHAM


RESPONDENT:

              THE PRINCIPAL COMMISSIONER OF INCOME TAX
              OFFICE OF THE COMMISSIONER OF INCOME TAX, 6TH,
              KANDAMKULATHY TOWERS, ERNAKULAM KOCHI, PIN - 682018.


              BY SRI.JOSE JOSEPH, STANDING COUNSEL

THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 31.10.2025, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
                               2
ITA No.63 of 2024                              2025:KER:82228



                        JUDGMENT

Harisankar V. Menon, J.

The appellant, an assessee under the Income Tax Act,

1961 (hereinafter referred to as the 'Act'), had claimed

deduction under the provisions of Section 32AC of the Act for

the assessment year 2014-15 as regards the new assets

acquired and installed during the financial year 2013-14

relevant to the assessment year concerned. The appellant

contends that the Assessing Officer (hereinafter referred to

as 'AO') had raised various queries as regards the claims

made in the returns, and one such query was the eligibility

for deduction under Section 32AC of the Act. The appellant

points out to Annexures C and D, letters dated 12.12.2017

and 15.12.2017, explaining the position, on account of which

AO did not proceed further as regards the claim made under

Section 32AC of the Act, thereby accepting the same; as

evidenced by Annexure A, the assessment order dated

23.10.2018. The respondent herein later sought to invoke the

ITA No.63 of 2024 2025:KER:82228

suo motu revisional power under Section 263 of the Act, since

according to him, a major portion of the assets purchased

were prior to 01.04.2013, which was omitted to be noticed by

AO while allowing the claim made by the appellant. Rejecting

the explanations offered by the appellant-assessee, the

respondent herein issued Annexure G order dated

29.03.2021, concluding that AO has incorrectly assumed the

facts of the case and incorrectly applied the law to the case

at hand. It is further held that the assessment order reflects

total non-application of mind and enquiry. Hence, the

assessment order is set aside for de novo examination and

for the passing of a speaking order in accordance with law.

The appeal against the afore order instituted by the appellant-

assessee is rejected by the Income Tax Appellate Tribunal,

Cochin Bench, by Annexure I order dated 10.05.2024. It is in

such circumstances that the appellant-assessee has instituted

the captioned appeal.

2. The following questions arise for our consideration in

this appeal:

ITA No.63 of 2024                                    2025:KER:82228




       i.    Whether on the facts and in the circumstances of the

case, the Appellate Tribunal is right in holding that the Commissioner was justified in invoking the revisionary jurisdiction under Section 263 of the Income Tax Act?

ii. Whether on the facts and in the circumstances of the case and in the light of the assessment proceedings, there was any evidence or material before Appellate Tribunal to justify its finding that the Assessing Officer has not made any enquiry with respect to the issue in question, and therefore the Commissioner was justified in invoking the jurisdiction under Section 263 of the IT Act?

3. Heard Sri.Joseph Markose, the learned senior counsel

for the appellant-assessee, and Sri.Jose Joseph, the learned

Standing Counsel for the respondent - revenue.

4. The assessee, as noticed earlier, had claimed the

benefits under Section 32AC of the Act. Section 32AC

provides for deductions with respect to investments made by

a company in "new plant or machinery" after 31.03.2013 but

before 01.04.2015, provided the aggregate amount of actual

cost of new assets exceeding Rs. 100 Crores, in the manner

ITA No.63 of 2024 2025:KER:82228

prescribed thereunder. A perusal of Annexure C clarification

provided by the assessee, upon which much reliance is placed

by it, shows that the assessee was required to provide

clarifications as regards its claim under section 32AC of the

Act by AO and that the assessee has provided the same also

with specific reference to the statute and the investments

made by it. The question of exercising the suo moto revisional

power under Section 263 of the Act arises only when the order

is both "erroneous" and "prejudicial to the interests of the

revenue".

5. The suo motu steps have been initiated, as noticed

earlier, since a major portion of the purchases entitling the

deduction were made prior to the cut-off date (01.04.2013).

However, the proviso to Section 32AC(1A) of the Act provided

for extension of the benefits with reference to the year in

which the "installation" has taken place of the assets, as

rightly contended by the learned senior counsel for the

assessee. The Tribunal has also, in paragraph 5.2 of its order,

noticed the above, with particular emphasis on the above

ITA No.63 of 2024 2025:KER:82228

proviso, however, not providing any finding as regards its

applicability.

6. Therefore, on the face of the afore provisions and the

explanations provided by the assessee to the AO as borne out

of the letter dated 12.12.2017 (Annexure C), we are of the

opinion that it cannot be said that there was no

inquiry/verification by the AO before he passed the

assessment order dated 23-10-2018 (Annexure A).

7. The Apex Court in Principal Commissioner of

Income-Tax v. V-con Integrated Solutions Pvt. Ltd.

[(2025) 476 ITR 526] has held as under:-

"3. The assessee does not have control over the pen of the Assessing Officer. Once the Assessing Officer carries out the investigation but does not make any addition, it can be taken that he accepts the plea and stand of the assessee.

4. In such cases, it would be wrong to say that the Revenue is remediless. The power under section 263 of the Income-tax Act, 1961, can be exercised by the Commissioner of Income-tax, but by going into the merits and making an addition, and not by way of a remand, recording that there was failure to investigate. There is a distinction between the failure or absence of investigation

ITA No.63 of 2024 2025:KER:82228

and a wrong decision/conclusion. A wrong decision/conclusion can be corrected by the Commissioner of Income-tax with a decision on the merits and by making an addition or disallowance."

Thus, merely for the reason that AO extended the deduction

claimed after carrying out investigations, exercise of the

power under Section 263 of the Act is not required. At worst,

the revisional authority can correct the error, if any,

committed by the AO, by holding that the extension of the

benefit of deduction was erroneous, with reference to the

purchase of the assets during the previous years. The

authority could also consider the issue as to the applicability

of the proviso to Section 32AC(1A), introduced by the Finance

Act, 2016, with only a prospective effect, as not applicable for

the year under assessment. True, the learned senior counsel

for the assessee has a case that the said amendment, being

clarificatory in nature, should have retrospective operation.

However, since there was no consideration of the afore aspect

at the hands of the respondent herein, we refrain from

rendering any finding thereon.

ITA No.63 of 2024 2025:KER:82228

8. Thus, we are of the opinion that the Tribunal went

wrong in confirming the exercise of the suo motu revisional

power in the case at hand. In view of the law laid by the Apex

Court in V-con Integrated Solutions Pvt. Ltd. (supra), we

are of the opinion that the matter requires to be remitted to

the respondent (revisional authority) for de novo disposal.

Resultantly, this appeal would stand allowed by setting

aside the impugned order of the Tribunal and remitting the

matter to the respondent/Principal Commissioner of Income

Tax, for fresh disposal in accordance with law, after affording

the assessee an effective opportunity of being heard.

Sd/-

A.MUHAMED MUSTAQUE JUDGE

Sd/-

                                   HARISANKAR V. MENON
                                          JUDGE
   ln

ITA No.63 of 2024                                   2025:KER:82228





APPELLANT'S ANNEXURES:

ANNEXURE A      TRUE COPY OF THE ASSESSMENT ORDER         DATED

23.10.2018 FOR ASSESSMENT YEAR 2014-15.

ANNEXURE B TRUE COPY OF THE RELEVANT PAGES OF TAX AUDIT REPORT IN FORM 3CA DATED 27.11.2014.

ANNEXURE C TRUE COPY OF THE LETTER DATED 12.12.2017 SENT BY THE APPELLANT TO THE ASSESSING OFFICER.

ANNEXURE D TRUE COPY OF THE LETTER DATED 15.12.2017 SENT BY THE APPELLANT TO THE ASSESSING OFFICER.

ANNEXURE E TRUE COPY OF NOTICE DATED 15.03.2021 ISSUED BY THE RESPONDENT.

ANNEXURE F TRUE COPY OF THE REPLY DATED 25.03.2021 FILED BY THE APPELLANT BEFORE THE RESPONDENT.

ANNEXURE G TRUE COPY OF THE ORDER DATED 29.03.2021 OF THE RESPONDENT.

ANNEXURE H TRUE COPY OF THE APPEAL DATED 06.05.2021 FILED BY THE APPELLANT BEFORE THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH.

ANNEXURE I CERTIFIED COPY OF THE IMPUGNED ORDER DATED 10.05.2024 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH