Ramachandran Nair, J v. Ita Nos: 73/09 Etc

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 7TH APRIL 2009 / 17TH CHAITHRA 1931 ITA.No. 73 of 2009() -------------------- ITA.8/C0CH//2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT --------------------------------------- THE COMMISSIONER OF INCOME TAX,TRICHUR. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT/RESPONDENT ------------------------------------ THE KERALA STATE FINANCIAL ENTERPRISES LTD.,TRICHUR. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/04/2009, ALONG WITH I.T.A.NO.81/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ON 07/04/2009, ALONG WITH I.T.A.NO.81/2009 THE COURT ON C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------------------------------------------------ I.T.A. NOS:73, 81 & 82 OF 2009 ----------------------------------------------------------------------------------- Dated this the 7[th] April, 2009. JUDGMENT RAMACHANDRAN NAIR, J. Since the questions raised in all the connected appeals filedby the revenue are generally covered by our judgment inasssessee's own case, we proceed to dispose of the cases withoutissuing notice to the respondent. The main issue raised pertainsto assessability of finance charges and hire purchase received underthe Interest Tax Act. In view of our decision in Commissioner ofIncome Tax v. Kerala State Financial Enterprises Ltd and others(220 CTR 286) we declare that finance charges and chargesreceived under hire purchase agreement will be subject to levy oftax under the Interest Tax Act. Besides hire purchase charges andinterest charges received assessee appears to have collecteddefault charges also along with finance charges and hire purchasecharges. The default interest also will form part of the interesttaxable under the Interest Tax Act. Questions 1 to 3 raised in ITA82/09, question No:1 raised in ITA 81/09 and questions 1 to 3raised in ITA 73/90 will stand answered in favour of the revenue ITA Nos: 73/09 etc. and against the assessee. Following the judgment in theconnected cases of same assessee and disposed of by us yesterdayin ITA 74/2009 we answer questions 4, 6 and 7 in ITA 73/2009raised by the revenue in favour of the assessee and against therevenue. So far as questions 8 and 9 are concerned which pertainto default interest on R.R dues and interest received on NFDL andNHFS we do not think the questions can be answered by usbecause Tribunal has not considered these issues in their order andso much so the questions do not arise from the order of theTribunal. We therefore decline to answer these two questionsraised in I.T.A 73/2009 leaving freedom to the department to movethe Tribunal for rectification of their order, if tenable. So far asquestion No:4 in ITA 82/09 is concerned we hold that the defaultinterest represents interest payable for defaulted payment of hirecharges for loans and advances. Therefore such default interestalso will form interest assessable under the Interest Tax Act. TheAssessing Officer is directed to verify and pass appropriate orders.Tribunal's order will stand modified as above. The position is thesame so far as question No:1 in ITA 81/09 also is concerned. So faras question Nos:3 and 4 in ITA 81/09 are concerned, we do not findthese questions as arising from the order of the Tribunal because ITA Nos: 73/09 etc. ITA Nos: 73/09 etc. they have not decided the issues raised by the department.Therefore, we decline to answer these two questions pertaining todefault interest on R.R dues and interest received on transactionsreferred as NFDL and NHFS. The appeals are allowed in part asstated above. The Assessing Officer will revise assessment aftergiving opportunity to the assessee. Since appeals are disposed ofwithout issuing notice to respondents, appellants will deposit batafor the Registry to forward copy of the judgment along with one setof appeal in all the cases . C.N. RAMACHANDRAN NAIRJudge K. SURENDRA MOHANJudge jj K.K.DENESAN & V. RAMKUMAR, JJ. ---------------------------------------------------- M.F.A.NO: ----------------------------------------------------- JUDGMENT Dated: