IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 3RD MARCH 2009 / 12TH PHALGUNA 1930 ITA.No. 175 of 2008() --------------------- ITA.17/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: ----------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT ------------------------- M/S. KALLUR CHIT FUNDS AND FINANCE (P) LTD., KALLUR. ADV. SRI.SHOBY K.FRANCIS FOR R1 THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 03/03/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... I.T. Appeal No.175 of 2008 .................................................................... Dated this the 3rd day of March, 2009. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel appearing for the appellant and counsel appearing for the respondent-assessee. The first issue that is, liability for interest tax on finance charges recovered by hire purchase company is covered in favour of the Revenue by decision of this court in COMMISSIONER OF INCOME TAX V. KERALA STATE FINANCIAL ENTERPRISES LTD. (220 CTR 286). Following the said judgment, we reverse the order of the Tribunal and restore the assessment under Interest Tax Act on the hire charges and finance charges recovered by the respondent. So far as the next contention i.e. department's claim for assessment of interest received from default subscribers is concerned, we do not think the claim is tenable because interest taxable under the Act is only interest received on loans and advances made in India. Subscriber is liable to pay interest on account of non-payment of the kurry subscription in time. So far as the 2 kurry subscriptions are not in the nature of loans or advances, no interest tax is payable on the interest payable for the belated payment of subscription. Appeal is, therefore, allowed in part with direction to the assessing authority to revise the assessment as indicated above. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms