IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS FRIDAY, THE 7TH JANUARY 2011 / 17TH POUSHA 1932 ITA.No. 46 of 2010() -------------------- AGAINST ORDER DATED 24/07/2009 IN M.P.NO.49/COCH/2009 AND ORDER DATED 19/12/2008 IN ITA.125/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT/ASSESSEE ------------------------------------------------ M/S.RAJESWARI HOSPITAL, THALAP, KANNUR REPRESENTED BY ITS MANAGING PARTNER, DR.V.P.DEVADAS. BY ADV. SRI.T.M.SREEDHARAN SMT.C.K.SHERIN SRI.V.P.NARAYANAN RESPONDENT(S): RESPONDENT/REVENUE --------------------------------- THE COMMISSIONER OF INCOME TAX, SAHANA AUDITORIUM, MELE CHOWWA, KANNUR-11. ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) FOR R SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/01/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & M.L.JOSEPH FRANCIS, JJ. ---------------------------------- I.T.A. No.46 of 2010 --------------------------------- Dated, this the 7th day of January, 2011 J U D G M E N T Ramachandran Nair, J. Heard Shri.T.M.Sreedharan, learned counsel appearing for the assessee, and learned Standing Counsel appearing for the respondent. 2. The first question raised pertains to the assessee's status in which it is assessed that is as an AOP, against the claim of the assessee that it is a partnership firm. However, it is seen that photocopy of partnership deed only was produced and in spite of opportunity given the assessee could not produce its original. Further the Assessing Officer noticed that the assessee manipulated resolution providing for payment of interest and salary to partners in terms of Section 40(b) of the Income Tax Act, and there is no provision in the partnership deed providing for payment of interest and salary to partners. In fact the resolution was seen written on 01/04/1995 in a note book printed in the year 1998. It is also seen ITA No.46/2010 -2- that the Assessing Officer has established that the assessee has committed violations falling under Section 144 of the IT Act, which disentitle the assessee to be assigned status of a firm. It is seen that the Tribunal has followed our judgment in Mubarak Trading Company v. Commissioner of Income Tax, reported in 2008(3) KLT 813. In view of the failures covered by Section 144, which are established beyond doubt, we do not think the assessee is entitled to be assigned in the status of a firm. Consequently, we reject this claim. 3. The next ground pertains to the addition of Rs.3,07,159/- sustained by the Tribunal. After going through the orders of the Tribunal we notice that from out of various additions, this one amount was sustained by the Tribunal for the reason that the assessee could not claim their stand that this amount is paid out of business funds i.e. from available source, which was used as a source for construction of the hospital building. Learned Standing Counsel referred to the assessee's own explanation given to the Assessing Officer and contended that even according to the assessee, this amount represents interest paid to the Bank on funds ITA No.46/2010 -3- borrowed and so much so the same does not constitute any source for investment. It is seen that after disposal of the appeal, the assessee moved a rectification application before the Tribunal, which was also rejected. We do not find any substantial question of law arising from the order of the Tribunal in refixing the unexplained expenditure sustained as income. Learned counsel appearing for the assessee brought to our notice that huge amount was demanded as interest payable under various provisions of the Act. It is for the assessee to bring the same to the notice of concerned authorities for waiver of interest or even challenge the interest, if levy is not permissible. Consequently, this I.T.Appeal is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (M.L.JOSEPH FRANCIS, JUDGE) jg