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 10TH AUGUST 2009 / 19TH SRAVANA 1931 ITA.No. 1038 of 2009() ---------------------- ITA.21/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- M/S. HEMAMBIKA HIRE PURCHASE & LEASING (P0 LTD., PALAKKAD. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 10/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & C. K. ABDUL REHIM, JJ. -------------------------------------------- I.T.A. No. 1038 OF 2009 -------------------------------------------- Dated this the 10th day of August, 2009 JUDGMENT Ramachandran Nair,J. The main issue raised by the department in this appeal is whether the assessee is liable to pay interest tax on Hire Charges, Finance Charges and default interest. We have already decided the matter in regard to interest tax on hire charges and finance charges in the decision reported in CIT V. KERALA STATE FINANCIAL ENTERPRISES LTD., 220 CTR 286. So far as the default interest is concerned, the issue is covered by the decision of this Court in ITA 57 of 2009. However, so far as the department's claim for interest tax on interest received under the Kissan Vikas Patras and Indira Vikas Patras are concerned, the case is not tenable because these deposits with the Post Office are investments and not in the nature of loan or advance attracting tax liability under the Interest Tax Act. In the circumstances, we allow the appeal in part by setting aside the order of the Tribunal and that of the first appellate authority and remand the matter to the 2 assessing officer for redoing the assessment based on the above judgments after issuing notice and after serving a copy of this judgment on the assessee. (C.N.RAMACHANDRAN NAIR) Judge. (C. K. ABDUL REHIM) Judge. kk 3