IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & HONOURABLE MR.JUSTICE ASHOK MENON MONDAY, 18TH DAY OF FEBRUARY 2019 / 29TH MAGHA, 1940 ITA.No.226 of 2014 AGAINST ORDER IN ITA NO.750/COCH/2013 DATED 06.06.2014 OF I.T.A.TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 2006-07] APPELLANT/RESPONDENT/ASSESSEE: M/S.COVEMA FILAMENTS LTD., 14B,COCHIN EXPORT PROCESSING ZONE, KAKKANAD, KOCHI-682030, REPRESENTED BY ITS DIRECTOR ADARSH DEVA. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.) RESPONDENT/APPELLANT/REVENUE: COMMISSIONER OF INCOME TAX, C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-18. BY SRI.JOSE JOSEPH, STANDING COUNSEL, GOI (TAXES). THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.02.2019, COURT ON SAME DAY DELIVERED FOLLOWING: ITA.226 of 2014 - 2 - JUDGMENT Vinod Chandran,J. appeal of assessee is from order of Income Tax Appellate Tribunal [for brevity Tribunal ] for assessment year 2006-07. 2. first question is with respect to unabsorbed depreciation/business loss; lower of which was to be granted deduction while computing tax under Section 115JB of Income Tax Act, 1961 [for brevity Act ]. Whether figures are to be taken as per books of accounts or as permissible under Income Tax Rules; is question raised. Tribunal found that there is no restriction as provided under 115JB and that it has to be from books of accounts. issue was remanded to Assessing Officer [for brevity AO ] for consideration. assessee has raised question on this in present appeal only because remand report of AO had specifically indicated facts. In any event, last fact finding authority, Tribunal, having remanded matter, holding issue in favour of assessee, and there is no appeal by Revenue; we would not interfere such consideration by AO in accordance with order of Tribunal. There is no question of law arising from aforesaid issue. ITA.226 of 2014 - 3 - 3. next issue is on provision for interest in Bank loan made for earlier years; from 2000-01 to 2005-06, being permissible as deduction under Explanation 1(i) to Section 115JB(2). On facts, it has to be noticed that assessee's specific claim was that though interest was shown as provision in earlier years, same was disallowed under Section 43B. It is also contended that in computation of MAT under Section 115JB, this amount was added back as unascertained liability in earlier years. assessee had been communicating with Bank as to One Time Settlement [OTS] during said period. Eventually in previous year relevant to subject year, 2006-07, matter was settled with Bank. entire interest was waived by Bank and also portion of principal. interest so debited to profit and loss account for earlier years was, hence, debited from reserve and credited to profit and loss account for subject year. same had to be deducted under Explanation (i) to Section 115JB(2). 4. Tribunal, however, found that interest is unascertained liability and ought not to have been disallowed in earlier years. When AO as per remand report at Annexure-C specifically states that it is ITA.226 of 2014 - 4 - disallowed under Section 43B, it was not proper for Tribunal to have taken such view. learned Standing Counsel, Government of India (Taxes) also argues that as of now it is not clear as to whether same was added back under Section 115JB. In such circumstances, earlier issue having been remanded, it is only proper that AO considers this issue also looking at facts. However, we make it clear that question of law raised as to whether same was unascertained liability or ascertained liability is answered in favour of assessee; if same has been disallowed under Section 43B as unascertained liability in earlier years. appeal is partly allowed and issues remanded for consideration; one in accordance with findings of Tribunal and other in accordance with what has been held by this Court. Parties are left to suffer their respective costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE ITA.226 of 2014 - 5 - APPENDIX APPELLANT'S ANNEXURES: ANNEXURE TRUE COPY OF ORDER DATED 13.04.2009 PASSED BY DEPUTY COMMISSIONER OF INCOME TAX. ANNEXURE B TRUE COPY OF ORDER DATED 7.8.2013 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-II, KOCHI. ANNEXURE C TRUE COPIES OF REMAND REPORT NO.ACIT/CIR-1/(1)/REM REP1/2013-14 DATED 17.7.2013 OF ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), KOCHI. ANNEXURE D TRUE COPIES OF REMAND REPORT NO.ACIT/CIR-1/(1)/REM REP2/2013-14 DATED 16.8.2013 OF ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), KOCHI. ANNEXURE E TRUE COPY OF APPEAL MEMORANDUM NO.ITAT-24/CIT-1/CHN DATED 20.9.2010 FILED BY DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH. ANNEXURE F TRUE COPY OF WRITTEN SUBMISSIONS(WITHOUT ANNEXURES). ANNEXURE G TRUE COPY OF ORDER IN ITA NO.750/COCH/2013 (ASSESSMENT YEAR 2006-07) DATED 6.6.2014 PASSED BY INCOME TAX APPELLATE TRIBUNAL, COCHIN. Vku/- [ true copy ] Covema Filaments Ltd. v. Commissioner of Income-tax, Cochin