Ita v. Ita

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS FRIDAY, THE 7TH JANUARY 2011 / 17TH POUSHA 1932 ITA.No. 46 of 2010() -------------------- AGAINST ORDER DATED 24/07/2009 IN M.P.NO.49/COCH/2009 AND ORDER DATED 19/12/2008 IN ITA.125/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT/ASSESSEE ------------------------------------------------ M/S.RAJESWARI HOSPITAL, THALAP, KANNUR REPRESENTED BY ITS MANAGING PARTNER, DR.V.P.DEVADAS. BY ADV. SRI.T.M.SREEDHARAN SMT.C.K.SHERIN SRI.V.P.NARAYANAN RESPONDENT(S): RESPONDENT/REVENUE --------------------------------- THE COMMISSIONER OF INCOME TAX, SAHANA AUDITORIUM, MELE CHOWWA, KANNUR-11. ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) FOR R SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/01/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & M.L.JOSEPH FRANCIS, JJ.---------------------------------- I.T.A. No.46 of 2010 --------------------------------- Dated, this the 7[th] day of January, 2011 J U D G M E N T Ramachandran Nair, J. Heard Shri.T.M.Sreedharan, learned counsel appearing for the assessee, and learned Standing Counsel appearing for therespondent. 2.The first question raised pertains to the assessee's statusin which it is assessed that is as an AOP, against the claim of theassessee that it is a partnership firm. However, it is seen thatphotocopy of partnership deed only was produced and in spite ofopportunity given the assessee could not produce its original.Further the Assessing Officer noticed that the assessee manipulatedresolution providing for payment of interest and salary to partnersin terms of Section 40(b) of the Income Tax Act, and there is noprovision in the partnership deed providing for payment of interestand salary to partners. In fact the resolution was seen written on01/04/1995 in a note book printed in the year 1998. It is also seen ITA No.46/2010 -2- that the Assessing Officer has established that the assessee hascommitted violations falling under Section 144 of the IT Act, whichdisentitle the assessee to be assigned status of a firm. It is seen thatthe Tribunal has followed our judgment in Mubarak TradingCompanyv. Commissioner of Income Tax, reported in 2008(3) KLT813. In view of the failures covered by Section 144, which areestablished beyond doubt, we do not think the assessee is entitledto be assigned in the status of a firm. Consequently, we reject thisclaim. 3.The next ground pertains to the addition ofRs.3,07,159/- sustained by the Tribunal. After going through theorders of the Tribunal we notice that from out of various additions,this one amount was sustained by the Tribunal for the reason thatthe assessee could not claim their stand that this amount is paid outof business funds i.e. from available source, which was used as asource for construction of the hospital building. Learned StandingCounsel referred to the assessee's own explanation given to theAssessing Officer and contended that even according to theassessee, this amount represents interest paid to the Bank on funds ITA No.46/2010 borrowed and so much so the same does not constitute any source for investment. It is seen that after disposal of the appeal, theassessee moved a rectification application before the Tribunal,which was also rejected. We do not find any substantial question oflaw arising from the order of the Tribunal in refixing theunexplained expenditure sustained as income. Learned counsel appearing for the assessee brought to ournotice that huge amount was demanded as interest payable undervarious provisions of the Act. It is for the assessee to bring the sameto the notice of concerned authorities for waiver of interest or evenchallenge the interest, if levy is not permissible. Consequently, this I.T.Appeal is dismissed. ITA No.46/2010 borrowed and so much so the same does not constitute any source for investment. It is seen that after disposal of the appeal, theassessee moved a rectification application before the Tribunal,which was also rejected. We do not find any substantial question oflaw arising from the order of the Tribunal in refixing theunexplained expenditure sustained as income. Learned counsel appearing for the assessee brought to ournotice that huge amount was demanded as interest payable undervarious provisions of the Act. It is for the assessee to bring the sameto the notice of concerned authorities for waiver of interest or evenchallenge the interest, if levy is not permissible. Consequently, this I.T.Appeal is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (M.L.JOSEPH FRANCIS, JUDGE) jg