IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 27TH AUGUST 2008 / 5TH BHADRA 1930 I.T.A.No.76 of 2008 -------------------------------- AGAINST THE ORDER DATED 27/04/2007 IN I.T.A.18/COCH/2006 OF THE INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH, COCHIN (ASSESSMENT YEAR 1999-2000) .................... APPELLANT/RESPONDENT/REVENUE:- ------------------------------------------------------ THE COMMISSIONER OF INCOME TAX, THRISSUR. BY SENIOR COUNSEL, GOVERNMENT OF INDIA (TAXES) SRI.P.K.R.MENON (SENIOR ADVOCATE ) & STANDING COUNSEL FOR GOVERNMENT OF INDIA (TAXES) SRI.GEORGE K.GEORGE. RESPONDENT/APPELLANT/ASSESSEE:- --------------------------------------------------------- THE SOUTH INDIAN BANK LTD., MISSION QUARTERS, THRISSUR. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 27/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.Dattu, C.J. & A.K.Basheer, J. ------------------------------------------------- I.T.A.No.76 of 2008 ---------------------------------------------- Dated, this the 27th day of August, 2008 JUDGMENT H.L.Dattu, C.J. Revenue has preferred this Income Tax Appeal under Section 260A of the Income Tax Act (“Act” for short), being aggrieved by the orders passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.No.18/Coch/2006 dated 27th April, 2007, for the assessment year 1999-2000, which was disposed of along with I.T.A.No.19/Coch/2006 for the assessment year 2000-2001. 2. Before the Tribunal, the assessee had raised two issues. The first one was with regard to: Whether the interest paid on refinance availed of from financial institutions will have to be subjected to interest tax in the hands of the assessee-Bank, which being the first credit institution receiving interest? 3. The Tribunal has answered the issue in favour of the assessee and against the Revenue, following the decision of this Court in the case of CIT v. State Bank of Travancore [228 ITR 40 (Kerala)]. 4. Therefore, in our opinion, the first issue has been rightly answered by the Tribunal in favour of the assessee. 5. The second issue that was canvassed by the assessee before the Tribunal was as under: “The chargeable interest of a credit institution shall be the total amount of interest accruing or arising to the credit institution in the relevant previous year and that the institution providing funds goes out of the ambit of Interest Tax on interest received from the banking company on account of specific exemption provided in the Interest Tax Act”. I.T.A.No.76 of 2008 - 2 - 6. Before the Tribunal, the Representative of the Revenue had conceded that the issue is squarely covered by the decision of this Court in CIT v. State Bank of Travancore [228 ITR 40 (Kerala)]. In view of the concession so made by the Representative of the Revenue, the Tribunal has answered the second issue also in favour of the assessee and against the Revenue. 7. Sri.George K.George, learned counsel appearing for the Revenue, would submit that the concession so made by the Revenue's Representative is under a mistaken impression and, therefore, this Court, while disposing of this Income Tax Appeal, may permit the Revenue to make an appropriate application, either for rectification/review of the orders passed by the Income Tax Appellate Tribunal. 8. In our opinion, while disposing of this appeal if permission is granted, it may not cause any prejudice to any one of the parties. 9. Therefore, while rejecting the Income Tax Appeal, we permit the Revenue to make an appropriate application for appropriate orders before the Income Tax Appellate Tribunal, if the same is permissible under law. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-