IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN TUESDAY, THE 13TH JULY 2010 / 22ND ASHADHA 1932 ITA.No. 114 of 2010() --------------------- AGAINST THE ORDER DATED 09/10/2009 IN ITA.217/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: ----------------------------------------- THE COMMISSIONER OF INCOME TAX KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: ------------------------- M/S.PLANTATION CORPORATION OF KERALA LTD., KOTTAYAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ALONG WITH ITA NOS.173&244 OF 2010 ON 13/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.114,173 & 244 of 2010 .................................................................... Dated this the 13th day of July, 2010. JUDGMENT Ramachandran Nair, J. Heard Standing Counsel for the appellants. The main question raised pertains to the assessment of interest income at the hands of the respondent-assessee which was cancelled by the Tribunal. The respondent is a Government of Kerala company which gave certain advances to two other companies also under the control of the Kerala Government. Since loans were advanced under Government orders which is a promoter of the respondent-company and since no interest was received from the loanee companies also under the control of the Government, the assessee went by the instructions of the Government to convert the loan amount to equity. Later the Board of Directors of the respondent accepted Government's proposal and allowed loan to be converted into equity shares allotted to the respondent. Even though the respondent-company requested the Government to pay interest for the period the loan amounts were retained as such with those 2 companies i.e. until the amount is converted into equity, so far no interest was received or agreed to be paid by the loanee companies. Since there is no accrual or receipt of interest, Tribunal cancelled the assessment of interest income. We are in complete agreement with the finding of the Tribunal because the loans were later treated as advance made for investments in equity i.e. for purchase of shares and so long as department has no case that interest accrued to the assessee, there is no scope for assessment. In view of the finding of facts rendered by the Tribunal based on which they rejected the department's case, we see no reason to interfere with the Tribunal's order. In fact, the other questions raised by the department in their appeals are not seen considered by the Tribunal. Therefore, those questions do not arise from orders of the Tribunal. Consequently we dismiss all the three appeals filed by the department. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms