Ita/8/2005 Of Sheth Brothers, Alappuzha v. Dy.commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 10TH JUNE 2008 / 20TH JYAISHTA 1930 ITA.No. 8 of 2005() ------------------- ITA.247/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/ASESSEE. ----------------------------------- SHETH BROTHERS, ALAPPUZHA. BY ADV. SRI.A.KRISHNAN RESPONDENTS: ASSESSING OFFICER. ------------------------------- 1. THE DEPUTY COMMISSIONER OF INCOMETAX, CIRCLE I, ALAPPUZHA. 2. THE COMMISSIONER OF INCOME TAX(APPEALS) IV, KOCHI. 3. INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, KOCHI. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) FOR R1 SRI.GEORGE K. GEORGE, SC FOR IT FOR R1 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &V.K.MOHANAN, JJ. .................................................................... I.T. Appeal No.8 of 2005....................................................................Dated this the 10th day of June, 2008. JUDGMENT Ramachandran Nair, J. Heard counsel for the appellant and Standing Counsel for the Income Tax Department. The question raised is whether appellant is liable to paytax on interest for the loans advanced to sister concerns and wife of one ofthe partners of a sister concern. We find from the Tribunal's order that theappellant has been consistently following mercantile system in charginginterest from 1992-93 onwards. However, appellant claims to havechanged the pattern of accounting to cash. On facts, Tribunal found that inview of the amendment to Section 145 with effect from 1.4.1997, appellant'sclaim is not maintainable. In other words, Tribunal held that havingfollowed mercantile system of accounting for several years, appellantcannot now shift the stand and contend that no interest is being charged onthe borrowers. We do not find any ground to interfere with the finding ofthe Tribunal because originally the advances were treated as loans by theappellant and interest was being charged. The appellant, therefore, cannotcontend that appellant discontinued charging of interest without any claim that interest on the loan cannot be recovered. No substantial question of law arises from the finding of the Tribunal. We, therefore, dismiss the appeal. C.N.RAMACHANDRAN NAIRJudge pms V.K.MOHANANJudge