2017 (8) TMI 859

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....ent 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. 4) By order (G.O. Ms. 576/88/RD) dated 25.06.1988, (Annexure-P-1), the State Government fixed the lease rent of the demised land payable by the respondent to the State. The respondent felt aggrieved o....

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....d the issue on 07.11.1991 and maintained their earlier order dated 25.06.1988. The respondent, therefore, claimed deduction of the said amount in the Assessment Year 1992-93 no sooner the issue in relation to fixation of lease rent was finally decided by the State. 7) The CIT (appeal) by order dated 30.06.1995 did not agree with the explanation given by the respondent and accordingly dismissed their appeal and confirmed the order of the Assessing Officer by upholding the disallowance. He also held that the liability to claim deduction was accrued to the respondent in the Assessment Year 1989-90 itself for two reasons, first, the respondent follows the mercantile system of accountancy and second, the lease rent had been fixed by the State o....

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.... Rai, learned counsel for the respondent. 11) Mr. K. Radhakrishnan, learned counsel for the appellant (Revenue) while assailing the legality and correctness of the impugned order contended that the liability in regard to fixation of lease rent by the respondent to the State was essentially a statutory liability because according to learned counsel it was determined, fixed, payable and lastly recoverable under the Kerala Land Assignment Act, 1960 (hereinafter referred to as "the Act") read with two Rules framed in exercise of powers conferred under Sections 3 and 7 of the Act called, "The Kerala Land Assignment Rules 1964" and "The Rules for Assignment of Government Land for Industrial Purposes" (hereinafter referred to as "the Rules"). It ....

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....ct and law it can be decided in first instance either by the CIT or Tribunal. 13) Having heard the learned counsel for the parties at length and on perusal of the record of the case, we are of the view that having regard to the nature of issue involved which is a mixed question of law and fact, it would be just and proper to remand the case to the Tribunal for deciding the issue afresh on merits. 14) 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 so, in which year of assessment is a mixed question of law and fact. Secondly, it was neither ....