IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 8TH JANUARY 2010 / 18TH POUSHA 1931 ITA.No. 1618 of 2009() ---------------------- ITA.800/COCH/2007 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT --------------------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: ------------------------- K.J.M. RESORTS INDIA PVT.LTD., SICILIA TOURIST COMPLEX, IDUKKI ROAD, THODUPUZHA. ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 08/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... I.T. Appeal No.1618 of 2009 .................................................................... Dated this the 8th day of January, 2010. JUDGMENT Ramachandran Nair, J. Heard Senior Standing Counsel appearing for the appellant and Sri.P.Balakrishnan, Advocate appearing for the respondent-assessee. 2. The question raised is whether the amount of Rs.10 lakhs received by the assessee from the Kerala Government as State Investment Subsidy is assessable as revenue. We find from the Tribunal's order that the Tribunal considered the matter in detail and came to the conclusion that the payment is towards subsidy for investment in the hotel. However, the case of the Revenue is that the payment is received by the assessee after commencement of the hotel business and so much so, it is revenue in nature. Counsel for the assessee on the other hand produced copy of the proceedings granting investment subsidy and also the certificate issued by the Tourism Department conferring “Star” status for the purpose of classification of respondent-assessee. In fact, the Director of Tourism while approving 2 the payment of Rs.10 lakhs directed the department to pay it to KFC to credit the term loan account of the respondent-assessee. The documents prove beyond doubt that the subsidy given is for setting up of the hotel and not to supplement it's income after commencement. It so happened that there was delay in payment of investment subsidy. However, in our view, such delay will not change the character of investment subsidy which is to meet the cost of investment which is capital in nature. 3. The next issue raised in the department's appeal is liability for interest under Section 234B in the case of assessment under Section 115JB. This issue stands decided against the Revenue by decision of this court in COMMISSIONER OF INCOME-TAX V. NILGIRI TEA ESTATE LTD. reported in (2009) 312 ITR 161. Consequently we dismiss the departmental appeal on both the issues. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms