COMMISSIONER OF INCOME TAX,TRICHUR V. KERALA STATE FINANCIAL ENTERPRISES LTD.

ITA/38/2009

AI Insights

The case revolves around the cancellation of a rectification order under Section 154 of the Income Tax Act by the Tribunal, which initially withdrew a deduction granted for interest tax paid on finance charges from hire purchase transactions. The issue emerged due to inconsistent orders from different authorities regarding interest tax assessments. The assessee, M/s. Kerala State Financial Enterprises Ltd., had contested and successfully removed the interest tax on finance charges, which led to the assessing officer's rectification of the income tax assessment. The Tribunal's cancellation of this rectification was based on the inapplicability of Section 154 in this context. The High Court's decision focused on the implications of double taxation if the rectification were allowed, given the assessee's prior tax payment on the refunded interest tax.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 728011 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 04-03-2009
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: JOSE JOSEPH
• Keywords: Assessment; Finance charges; Income Tax; Interest Tax; Rectification Order; Hire Purchase Transactions
• Section: 154

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 4TH MARCH 2009 / 13TH PHALGUNA 1930 ITA.No. 38 of 2009() -------------------- ITA.650/COCH/2007 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: ------------------------------ THE COMMISSIONER OF INCOME TAX, THRISSUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT: -------------------------- M/S.KERALA STATE FINANCIAL ENTERPRISES LTD., 'BHADRATHA', MUSEUM ROAD, THRISSUR. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04/03/2009 ALONG WITH ITA NOS. 39 TO 41/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. Nos. 38 to 41 OF 2009 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of March, 2009 JUDGMENT Ramachandran Nair,J. The question raised is whether the Tribunal was justified in cancelling rectification order issued under Section 154 of the I.T. Act by the assessing officer withdrawing the deduction granted towards interest tax paid on finance charges received in hire purchase transactions. The issue arose because of the divergent orders issued by different authorities in interest tax assessments. The demand of interest tax paid on finance charges was allowed in I.T. assessment by way of rectification of original assessment, when the assessee in fact paid the interest tax on finance charges. However, the assessee successfully contested the interest tax assessment on finance charges and got it deleted. Thereafter income tax assessment was again rectified by the assessing officer withdrawing the deduction granted on interest tax on finance charges which the assessee ceased to be entitled by virtue of the order of the Tribunal in the interest tax appeals filed by the assessee. It is this order that is cancelled by the Tribunal on the ground that Section 154 is not 2 applicable. In the course of hearing, standing counsel appearing for the appellants submitted that the assessee has paid tax on the interest tax amount refunded to it with interest for the relevant assessment years which are 2005-06 and 2006-07. If we allow appeals without rectification of assessments for the years 2005-06 and 2006-07 to cancel the assessment of refund amounts, there will be double taxation of the same amount. In this view of the matter, we dismiss the departmental appeals without going into the correctness of the decision of the Tribunal. However, we make it clear that the assessee is not entitled to rectification or modification of the assessments for the years ;2005-06 and 2006-07 pertaining to assessment of refund of interest tax. Since appeals are disposed of at the admission stage, there will be direction to the Registry to forward a copy of this judgment to the respondent-assessee for their information. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk "