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. After hearing 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 finance charges and hire purchase charges received, is squarely covered by decision of this court in COMMISSIONER OF INCOME TAX V. KERALA STATE FINANCIAL ENTERPRISES LTD. & OTHERS reported in (2008) 220 CTR 286. In the normal course we should issue notice to the respondent and hear them before the appeal is allowed. However, since the main issue raised is squarely covered against the assessee, we do not think any notice is required to be issued for deciding this issue. The other question raised pertain to interest received by the assessee from the Government for service rendered in regard to acceptance of deposit by Government under the Bhadratha Deposit Scheme. The interest received by the company is not towards 2 interest on loans or advances, but is only interest paid by the Government for service rendered under the Bhadratha Deposit Scheme. Similarly house building loan and vehicle loan given by the assessee to employees are not in the form of loans or advances on commercial lines, but is part of conditions of service of the employees. Default interest received on hire purchase and finance charges received will also be subject to interest tax under the Interest Tax Act because in the decision abovereferred we have held that finance charges and hire purchase charges received attract interest tax under the Interest Tax Act. We, therefore, allow the appeal in part by reversing the order of the Tribunal excluding finance charges or hire purchase charges and default interest received on these transactions from the scope of Interest Tax Act. The Assessing Officer is directed to revise the assessment following the judgment abovereferred on this subject, after issuing notice to the assesee. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms