IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 10TH FEBRUARY 2010 / 21ST MAGHA 1931 ITA.No. 67 of 2008(Y) --------------------- ITA.171/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: -------------------- THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM BY ADV. SRI.GEORGE K. GEORGE, SC FOR IT SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) RESPONDENT/RESPONDENT: --------------- ENGLISH INDIAN CLAYS LTD. VELI, THIRUVANANTHAPURAM. ADV. SRI.A.KUMAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ALONG WITH ITA NO.140/2008 ON 10/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.67 &140 of 2008 .................................................................... Dated this the 10th day of February, 2010. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel appearing for the appellant and Adv. Sri.A.Kumar appearing for the respondent-assessee. 2. The first three questions raised by the Revenue in the appeals stand covered by our judgment in I.T.A. No.80/2008 in assessee's own case for another assessment year. Therefore, the Tribunal's orders declaring assessee's eligibility for loss on revaluation of shares is confirmed. 3. The next question raised by the department pertains to deletion of Rs.1,76,83,202/- which is the lease rentals originally returned by the assessee and later disputed by them. It is the conceded position that the lease rentals accounted is for lease of Aluminium cops and other equipments during the previous year relevant for the assessment year 1994-95. However, while making the assessment for that year, the Assessing Officer found that the lease transaction is a sham transaction 2 and there was no lease as claimed by the assessee. In fact, the disallowance of depreciation and the liability leading to consequent assessment was later settled by assessee under KVS Scheme. Consistent with the department's own stand that there was no genuine lease, the assessee's subsequent dispute against the assessment of lease rental in respect of the very same lease was rightly allowed by the Tribunal. We, therefore, reject the department's appeals on this issue. 4. The next important issue raised pertains to the claim of deduction of over Rs.15 lakhs which was claimed as front end fee paid to various Banks and financial institutions for arranging loans. There is controversy as to the factual position on this because the officer has stated that the amount represents acquisition of capital asset. However, the finding of the Tribunal is that the amount represents expenditure incurred by the assessee for getting term loan from the Banks and financial institutions. If the fact found by the Tribunal is correct, then they were right in allowing the claim because expenditure incurred for raising loan is a business expenditure allowable under the Act. If there is factual error, it is for the department to seek rectification from the 3 Tribunal which was not done in this case. We, therefore, reject the appeals on this issue also. 5. We do not find any other question raised is substantial question of law and all such questions raised are on pure finding of fact by the Tribunal based on evidence. Consequently both appeals are dismissed. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms