IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID THURSDAY, THE 27TH NOVEMBER 2008 / 6TH AGRAHAYANA 1930 ITA.No. 145 of 2008() --------------------- ITA.271/COCH/2000 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT:- ----------------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT(S)/RESPONDENT: --------------- KERALA STATE ELECTRICITY BOARD, THIRUVANANTHAPURAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 27/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N. RAMACHANDRAN NAIR & HARUN-UL-RASHID, JJ. --------------------------------------------------------- I.T. APPEAL NO. 145 OF 2008 --------------------------------------------------------- Dated this the 27th day of November, 2008 JUDGMENT Ramachandran Nair, J. The respondent-assessee is the Kerala State Electricity Board, a statutory body basically under the Government and engaged in the generation and distribution of electricity in the State. 2. The first issue pertains to disallowance made under Section 37 (4)(ii) of the Income Tax Act regarding expenses for maintenance of guest houses. In first appeal, Commissioner of Income Tax (Appeals) modified the order which is confirmed by the Tribunal in second appeal. In principle, we find that the Tribunal has confirmed the disallowance. So far as quantum of disallowance is concerned, we do not find any substantial question of law arising out of the order of the Tribunal. I.T.Appeal No.145/2008 2 3. The next question which appears to be important relates to addition of electricity duty collected from customers by the K.S.E.B. and retained by it without remitting the amount to the Government. Disallowance made under Section 43 B was reversed by the Commissioner of Income Tax (Appeals) on the ground that the assessee has not taken the collection as its income in the profit and loss account, but has shown the same in the balance sheet to be adjusted against Government loans. Even though Standing Counsel for the K.S.E.B. has produced before us the grounds of appeal which shows that this was taken as a ground of appeal, it is neither seen argued nor decided by the Tribunal. Therefore, obviously, no appeal on this issue will lie to the High Court under Section 260 A of the Income Tax Act. It is not known whether this ground of appeal was given up at the stage of argument or whether the Tribunal left out the issue. In any case, if there is omission on the part of the Tribunal, it is for the department to bring it to the notice of the Tribunal in a proceedings for rectification. However, having regard to the nature of the issue and the peculiar relation between the Government and its agency, we do not know whether the department should pursue the matter because the assessee in this case is not an ordinary business concern but a statutory agency and its collection of duty for the Government is not like collection of tax or duty and retention of the same by any other I.T.Appeal No.145/2008 3 assessees. Appeal is, therefore, dismissed with the above observation. (C.N. RAMACHANDRAN NAIR) JUDGE (HARUN-UL-RASHID) JUDGE sp/ I.T.Appeal No.145/2008 4 C.N. RAMACHANDRAN NAIR & HAURN-UL-RASHID, JJ. I.T.A.NO. 145/2008 JUDGMENT 27th November, 2008