Ita : 139/08 v. C.n.ramachandran Nair)Judge.judge

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN FRIDAY, THE 27TH FEBRUARY 2009 / 8TH PHALGUNA 1930 ITA.No. 139 of 2008() --------------------- ITA.89/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APELLANT:- ---------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) RESPONDENT/RESPONDENT:- ------------------------------- SRINIKETHAN TRUST, PARAMESWAR NAGAR, KOLLAM . BY ADV. SRI.P.BALAKRISHNAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 27/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &K. SURENDRA MOHAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 139 OF 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 27[th] day of February, 2009 JUDGMENT Ramachandran Nair,J. The question raised in the appeal filed by the Department iswhether Tribunal was justified in confirming the cancellation ofrectification order issued under Section 154 of the Act inrespondent/assessee's case. The assessee was engaged in exportbusiness and for availing letter of credit, assessee deposited marginmoney which fetched some interest. In the original assessmentthe assessing officer accepted the income returned as income frombusiness. However, later, assessment was rectified under Section154 assessing interest income as income from other sources. Whenappeal was filed, the rectification order was cancelled, which isconfirmed by the Tribunal. Against this, the Revenue filed thisappeal. Eventhough Standing Counsel submitted that the issue issettled by a consistent decision of this Court in several cases,counsel for the assessee contended that the later decisions onlyexplained the position clearly and as on the date of originalassessment, i.e. on 28.12.98, and later when rectification order was passed on 21.06.99, the issue was not free from doubt. We findfrom the Tribunal's order that the position is clarified beyond doubt byjudgments of this Court and Supreme Court subsequent to originalassessment and revision of the same. Probably, the only decisionthat was available at the time of the rectification of assessment wasreported in Commissioner of Income Tax, Kerala v. CochinRefineries Ltd.[154 ITR 345] which is a case of e interest earned onshort term deposit of surplus income where as in this case, theinterest earned is on margin money deposited for getting letter ofcredit opened for the purpose of import of raw-materials, namely,cashew nuts. We, therefore, feel that as on the date of rectificationof assessment under Section 154 the issue was still debatable andnot settled by the decision of this Court or Supreme Court.Consequently, no interference is called for against the order of theTribunal. Appeal is therefore dismissed. (C.N.RAMACHANDRAN NAIR)Judge.Judge. (K. SURENDRA MOHAN) Judge. ITA : 139/08