Ita/3/2013 Of The Kerala Cashew Development Corporation Ltd., Kollam v. Commissioner Of Income Tax, Trivndrum

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY THURSDAY, THE 20TH DAY OF AUGUST 2015/29TH SRAVANA, 1937 ITA.No. 3 of 2013 () --------------------- AGAINST THE ORDER IN ITA 417/2009 of INCOME TAX APPELLATE TRIBUNAL,COCHINBENCH DATED 22-06-2012 APPELLANT/APPELLANT/ASSESSEE: ---------------------------------------------------- THE KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., CASHEW HOUSE, MUNDAKKAL, KOLLAM. BY ADV. SRI.S.ARUN RAJ RESPONDENT/RESPONDENT/REVENUE: ------------------------------------------------------------------ COMMISSIONER OF INCOME TAX, KAWADIAR, THIRUVANANTHAPURAM - 695 003. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 20-08-2015, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 3 of 2013 APPENDIX APPELLANT'S ANNEXURES: ANNEXURE – A: TRUE COPY OF THE ASSESSMENT ORDER DATED 15.2.2008PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE – 1, KOLLAM FOR THEAY 2004-05. ANNEXURE – B: TRUE COPY OF THE ORDER DATED 24.03.2009 PASSED BY THECIT(A) – 1, TRIVANDRUM FOR THE AY – 2004-05. ANNEXURE – C: TRUE COPY OF THE ORDER DATED 22.6.2012 PASSED BY THEINCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN THE CASE OF THEAPPELLANT FOR THE A.Y.2004-05. ANNEXURE – D: TRUE COPY OF SOME OF THE ORDER BASED ON LOANAGREEMENTS EXECUTED BETWEEN THE APPELLANT AND THE GOVERNMENT OFKERALA. RESPONDENT'S ANNEXURES: NIL //TRUE COPY// P.A TO JUDGE smv ANTONY DOMINIC & SHAJI P. CHALY, JJ. ----------------------------------------------- I.T.A. No.3 of 2013 ----------------------------------------------- Dated this the 20[th] day of August, 2015 JUDGMENT Antony Dominic,J. This appeal is filed by the Kerala Cashew DevelopmentCorporation Ltd. challenging the order passed by the Income TaxAppellate Tribunal, Cochin Bench in ITA No.417/2009 pertainingto the assessment year 2004-2005. 2. Three issues are raised in this appeal. The first issue iswith regard to dis-allowance of interest on Government loan tothe extent of Rs.11,54,95,137/-. The second issue is regardingthe addition of interest on Government loan outstanding as on31.03.2004 and the third issue pertains to addition of interest onGovernment loan on which the rate of interest is not fixed. Bythe impugned order the Tribunal sustained all the threeadditions. It is this order which is challenged by the assesseeand the questions of law raised are essentially regarding thecorrectness of the said additions. 3. Heard the learned counsel for the assessee and thelearned Standing Counsel appearing for the Revenue. 4. In so far as the first issue regarding dis-allowance ofinterest on Government loan to the extent of Rs.11,54,95,137/- isconcerned, in paragraph 5 of its order though the Tribunal statesthat the Government had not initially specified any terms andconditions of the loan, at a later part of the order the Tribunalsays that the Government in their order dated 03.08.1996specified the rate of interest and penal interest. Proceedingfurther, the main reason assigned by the Tribunal for sustainingthe dis-allowance is that the Government had not taken anyaction for recovery of the amount. As rightly pointed out by thecounsel, in coming to this conclusion the Tribunal or the lowerauthorities did not make reference to the relevant Governmentorders on the basis of which the loan was sanctioned and alsothe orders in which conditions were specified by theGovernment. 5. Similar is a case that with respect to addition of intereston Government loan outstanding as on 31.03.2004, on which 5. Similar is a case that with respect to addition of intereston Government loan outstanding as on 31.03.2004, on which date, while the assessee contends that the part of the principalamount of loan was converted as share capital and the revenuedisputes it by contending that the conversion included theoutstanding interest as well. In so far the 3[rd] item regarding theaddition of interest on the Government loan on which rate ofinterest is not fixed is concerned, though the total amountnoticed in the First Appellate Authority's order isRs.12,61,32,606/-, the Tribunal seems to have proceeded that itis only Rs.4,32,34,476/-. Here again, relevant Governmentorders are not referred to or discussed. 6. All these in our view calls for re-examination of issue.Though, we were initially inclined to remit the matter to theTribunal, we notice that the findings of the Tribunal are basicallyreiteration of the findings of the lower authorities. Consideringthat factual situation, we deem it appropriate to remit the matterto the Assessing Officer so that the whole issue can be examinedwith notice to the assessee. 7. Accordingly, we set aside the impugned orders passed bythe Tribunal and also that of the lower authorities and remit the matter to the Assessing Officer with a direction to re-consideraforesaid three issues with notice to the assessee. Appeal is disposed of accordingly. Sd/-ANTONY DOMINIC JUDGE smv Sd/-JUDGE SHAJI P. CHALY