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 THURSDAY, THE 30TH JULY 2009 / 8TH SRAVANA 1931 ITA.No. 732 of 2009() --------------------- ITA.100/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- M/S.SHINE SUN FINANCE (P) LTD., TRICHUR. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 30/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... I.T. Appeal No.732 of 2009 .................................................................... Dated this the 30th day of July, 2009. JUDGMENT Ramachandran Nair, J. This court has in the decision in COMMISSIONER OF INCOME TAX V. KERALA STATE FINANCIAL ENTERPRISES LTD. (220 CTR 286) held that interest under whatever head in respect of hire purchase arrangements and interest by way of finance charges recovered attract liability for tax under the Interest Tax Act. Similarly it was held in I.T.A. No.57 of 2009 that default interest under hire purchase arrangement also attracts liability. However, we have taken the consistent view that investments in Indira Vikas Pathra and Kissan Vikas Pathra do not attract any liability under the Interest Tax Act. Following the judgments abovereferred, we allow the appeal in part by setting aside the order of the Tribunal and that of the first appellate authority and restore the assessment back to the officer for 2 recomputation of liability based on judgments abovereferred, after giving opportunity to the assessee and after sering a copy of this judgment on the assessee. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms