IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN FRIDAY, THE 27TH FEBRUARY 2009 / 8TH PHALGUNA 1930 ITA.No. 139 of 2008() --------------------- ITA.89/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APELLANT:- ---------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) RESPONDENT/RESPONDENT:- ------------------------------- SRINIKETHAN TRUST, PARAMESWAR NAGAR, KOLLAM . BY ADV. SRI.P.BALAKRISHNAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 27/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 139 OF 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 27th day of February, 2009 JUDGMENT Ramachandran Nair,J. The question raised in the appeal filed by the Department is whether Tribunal was justified in confirming the cancellation of rectification order issued under Section 154 of the Act in respondent/assessee's case. The assessee was engaged in export business and for availing letter of credit, assessee deposited margin money which fetched some interest. In the original assessment the assessing officer accepted the income returned as income from business. However, later, assessment was rectified under Section 154 assessing interest income as income from other sources. When appeal was filed, the rectification order was cancelled, which is confirmed by the Tribunal. Against this, the Revenue filed this appeal. Eventhough Standing Counsel submitted that the issue is settled by a consistent decision of this Court in several cases, counsel for the assessee contended that the later decisions only explained the position clearly and as on the date of original assessment, i.e. on 28.12.98, and later when rectification order was ITA : 139/08 -:2:- passed on 21.06.99, the issue was not free from doubt. We find from the Tribunal's order that the position is clarified beyond doubt by judgments of this Court and Supreme Court subsequent to original assessment and revision of the same. Probably, the only decision that was available at the time of the rectification of assessment was reported in Commissioner of Income Tax, Kerala v. Cochin Refineries Ltd. [154 ITR 345] which is a case of e interest earned on short term deposit of surplus income where as in this case, the interest earned is on margin money deposited for getting letter of credit opened for the purpose of import of raw-materials, namely, cashew nuts. We, therefore, feel that as on the date of rectification of assessment under Section 154 the issue was still debatable and not settled by the decision of this Court or Supreme Court. Consequently, no interference is called for against the order of the Tribunal. Appeal is therefore dismissed. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. ttb ITA : 139/08 -:3:- ITA : 139/08 -:4:-