Ita/114/2010 Of Commissioner Of Income Tax, Kottayam v. M/S.plantation Corporation Of Kerala Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN TUESDAY, THE 13TH JULY 2010 / 22ND ASHADHA 1932 ITA.No. 114 of 2010() --------------------- AGAINST THE ORDER DATED 09/10/2009 IN ITA.217/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: ----------------------------------------- THE COMMISSIONER OF INCOME TAX KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: ------------------------- M/S.PLANTATION CORPORATION OF KERALA LTD., KOTTAYAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ALONG WITH ITA NOS.173&244 OF 2010 ON 13/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &P.S.GOPINATHAN, JJ. ....................................................................I.T. Appeal Nos.114,173 & 244 of 2010....................................................................Dated this the 13th day of July, 2010. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel for the appellants. The main questionraised pertains to the assessment of interest income at the hands of therespondent-assessee which was cancelled by the Tribunal. Therespondent is a Government of Kerala company which gave certainadvances to two other companies also under the control of the KeralaGovernment. Since loans were advanced under Government orderswhich is a promoter of the respondent-company and since no interestwas received from the loanee companies also under the control of theGovernment, the assessee went by the instructions of the Governmentto convert the loan amount to equity. Later the Board of Directors ofthe respondent accepted Government's proposal and allowed loan to beconverted into equity shares allotted to the respondent. Even thoughthe respondent-company requested the Government to pay interest forthe period the loan amounts were retained as such with those companies i.e. until the amount is converted into equity, so far nointerest was received or agreed to be paid by the loanee companies.Since there is no accrual or receipt of interest, Tribunal cancelled theassessment of interest income. We are in complete agreement with thefinding of the Tribunal because the loans were later treated as advancemade for investments in equity i.e. for purchase of shares and so longas department has no case that interest accrued to the assessee, there isno scope for assessment. In view of the finding of facts rendered bythe Tribunal based on which they rejected the department's case, we seeno reason to interfere with the Tribunal's order. In fact, the otherquestions raised by the department in their appeals are not seenconsidered by the Tribunal. Therefore, those questions do not arisefrom orders of the Tribunal. Consequently we dismiss all the threeappeals filed by the department. C.N.RAMACHANDRAN NAIRJudge P.S.GOPINATHANJudge