Ita/67/2008 Of Commissioner Of Income Tax v. M/S.english Indian Clays 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 WEDNESDAY, THE 10TH FEBRUARY 2010 / 21ST MAGHA 1931 ITA.No. 67 of 2008(Y) --------------------- ITA.171/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: -------------------- THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM BY ADV. SRI.GEORGE K. GEORGE, SC FOR IT SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) RESPONDENT/RESPONDENT: --------------- ENGLISH INDIAN CLAYS LTD. VELI, THIRUVANANTHAPURAM. ADV. SRI.A.KUMAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ALONG WITH ITA NO.140/2008 ON 10/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.67 &140 of 2008 ....................................................................Dated this the 10th day of February, 2010. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel appearing for the appellant and Adv.Sri.A.Kumar appearing for the respondent-assessee. 2. The first three questions raised by the Revenue in the appealsstand covered by our judgment in I.T.A. No.80/2008 in assessee's owncase for another assessment year. Therefore, the Tribunal's ordersdeclaring assessee's eligibility for loss on revaluation of shares isconfirmed. 3. The next question raised by the department pertains to deletionof Rs.1,76,83,202/- which is the lease rentals originally returned by the assessee and later disputed by them. It is the conceded position that thelease rentals accounted is for lease of Aluminium cops and otherequipments during the previous year relevant for the assessment year1994-95. However, while making the assessment for that year, theAssessing Officer found that the lease transaction is a sham transaction and there was no lease as claimed by the assessee. In fact, thedisallowance of depreciation and the liability leading to consequentassessment was later settled by assessee under KVS Scheme.Consistent with the department's own stand that there was no genuinelease, the assessee's subsequent dispute against the assessment of leaserental in respect of the very same lease was rightly allowed by theTribunal. We, therefore, reject the department's appeals on this issue. 4. The next important issue raised pertains to the claim ofdeduction of over Rs.15 lakhs which was claimed as front end fee paidto various Banks and financial institutions for arranging loans. Thereis controversy as to the factual position on this because the officer hasstated that the amount represents acquisition of capital asset. However,the finding of the Tribunal is that the amount represents expenditureincurred by the assessee for getting term loan from the Banks andfinancial institutions. If the fact found by the Tribunal is correct, thenthey were right in allowing the claim because expenditure incurred forraising loan is a business expenditure allowable under the Act. If thereis factual error, it is for the department to seek rectification from the Tribunal which was not done in this case. We, therefore, reject theappeals on this issue also. 5. We do not find any other question raised is substantialquestion of law and all such questions raised are on pure finding of factby the Tribunal based on evidence. Consequently both appeals aredismissed. C.N.RAMACHANDRAN NAIRJudge pms P.S.GOPINATHANJudge