Tamil Nadu Warehousing Corporation vs Assistant Commissioner of Income Tax

K. Raviraja Pandian, J.—This appeal is filed against the order of the Income Tax Appellate Tribunal, Madras ""C"" Bench, Chennai, dated

May 14, 2008 passed in I. T. A. No. 1204/Mds/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 assessment year 2003-04, the Assessee filed returns and

claimed exemption u/s 10(29) of the Income Tax Act, 1961, in respect of the income derived from the activities carried on by the asses-see, 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 u/s 10(29) of the Income Tax Act. The Assessing Officer 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 Commissioner of Income Tax (Appeals), 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 Commissioner of Income Tax (Appeals) 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 Commissioner of Income Tax (Appeals), went on further appeal to the Income Tax Appellate

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:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in rejecting the application for

condonation of delay amounting to 109 days ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate 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 Income Tax Department, we are of the view has to obtain

clearance from the Committee on Disputes (CoD). The apex court, in the case of Oil and Natural Gas Corporation Ltd. Vs. City and Indust. Dev.

Corpn., Maharashtra and Others, , after referring to the earlier cases in 1992 (61) ELT 3 (SC) , Oil and Natural Gas Commission and Another

Vs. Collector of Central Excise, , Oil and Natural Gas Commission Vs. Collector of Central Excise, , in which directions have been issued to set

up governmental committee to resolve the dispute between the intragovernmental 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.

The Supreme Court in the case of Chief Conservator of Forests, Govt. of A.P. Vs. The Collector and Others, has held as follows:

Disputes between Government Departments, cannot be contested in court. State/Union of India must evolve a mechanism for resolving

interdepartmental 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.

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 Commissioner of Income Tax, Delhi-VI Vs. Oriental

Insurance Co. Ltd., in Civil Appeals Nos. 4529 of 2008, etc., decided on July 18, 2008.

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.