IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 27TH JULY 2009 / 5TH SRAVANA 1931 ITA.No. 609 of 2009() --------------------- AGAINST THE ORDER DATED 20/08/2004 IN ITA.192/COCH/2003 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- COMMISSIONER OF INCOME-TAX,KOTTAYAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: ------------------------ M/S.HINDUSTAN NEWSPRINT LTD.,KOTTAYAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 27/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... I.T. Appeal No.609 of 2009 .................................................................... Dated this the 27th day of July, 2009. JUDGMENT Ramachandran Nair, J. The question raised is whether the respondent is liable to pay tax on interest in respect of the loan advanced to another Government Company. Respondent being a Government undertaking gave the advance based on instruction from the Ministry. However, it is the clearcut finding that not only the borrower is not giving any interest to the respondent, but even the loan itself has become a bad or doubtful debt because the loanee has become a defunct company. The findings of the Tribunal are quite realistic and department has no case to the contrary. In the circumstances, respondent even though accounted interest on accrual basis based on terms of loan, rightly discontinued crediting interest in respect of a loan which has become bad. However, we are sure that if by any chance interest is recovered, respondent will 2 be accounting the same on cash basis and will be remitting tax. Appeal is accordingly dismissed. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms