Ramachandran Nair, J v. Kerala State Financial Enterprises

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 23RD MARCH 2009 / 2ND CHAITHRA 1931 ITA.No. 57 of 2009() -------------------- ITA.5/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX,TRICHUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- KERALA STATE FINANCIAL ENTERPRISES LTD TRICHUR. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 23/03/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &K.SURENDRA MOHAN, JJ. ....................................................................I.T. Appeal No.57 of 2009 .................................................................... Dated this the 23rd day of March, 2009. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel appearing for the appellant. Afterhearing the counsel and after going through the orders of the Tribunal,we find that the main issue raised i.e. liability for interest tax on financecharges and hire purchase charges received, is squarely covered bydecision of this court in COMMISSIONER OF INCOME TAX V.KERALA STATE FINANCIAL ENTERPRISES LTD. & OTHERSreported in (2008) 220 CTR 286. In the normal course we shouldissue notice to the respondent and hear them before the appeal isallowed. However, since the main issue raised is squarely coveredagainst the assessee, we do not think any notice is required to be issuedfor deciding this issue. The other question raised pertain to interestreceived by the assessee from the Government for service rendered inregard to acceptance of deposit by Government under the BhadrathaDeposit Scheme. The interest received by the company is not towards interest on loans or advances, but is only interest paid by theGovernment for service rendered under the Bhadratha Deposit Scheme.Similarly house building loan and vehicle loan given by the assessee toemployees are not in the form of loans or advances on commerciallines, but is part of conditions of service of the employees. Defaultinterest received on hire purchase and finance charges received willalso be subject to interest tax under the Interest Tax Act because in thedecision abovereferred we have held that finance charges and hirepurchase charges received attract interest tax under the Interest TaxAct. We, therefore, allow the appeal in part by reversing the order ofthe Tribunal excluding finance charges or hire purchase charges anddefault interest received on these transactions from the scope of InterestTax Act. The Assessing Officer is directed to revise the assessmentfollowing the judgment abovereferred on this subject, after issuingnotice to the assesee. C.N.RAMACHANDRAN NAIRJudge