The Commissioner Of Income Tax vs Kerala Minerals And Metals Ltd on 3 December, 2009

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

ITA.No. 295 of 2009()


1. THE COMMISSIONER OF INCOME TAX,
                      ...  Petitioner

                        Vs



1. KERALA MINERALS AND METALS LTD.,
                       ...       Respondent

                For Petitioner  :SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES)

                For Respondent  :SRI.A.KUMAR

The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN

 Dated :03/12/2009

 O R D E R
             C.N.RAMACHANDRAN NAIR &
                     V.K.MOHANAN, JJ
         --------------------------------------------------
                  I.T.A.NO. 295 OF 2009
         --------------------------------------------------
         Dated this the 3rd day of December, 2009

                      J U D G M E N T

Ramachandran Nair,J:

Two questions are raised in the appeal filed by

the Revenue. One question is covered by our decision in

assessee’s own case in I.T.A.No.8 of 2008. The remaining

question is about assessee’s entitlement for deduction of

interest on sales tax arrears converted into loan due to the

Government. The Department does not dispute the

conversion of the sales tax arrears into loan by the

Government which was payable in the course of time with

interest. When sales tax arrears are converted into loan,

the same becomes a business loan entitling the assessee

for deduction of interest under Section 36(1)(iii) of the

Income Tax Act,1961 (for short ‘the Act’). Since the loan is

for the purpose of business, interest payable is a liability

incurred for availing the said loan. Therefore, even if the

claim is not allowable under Section 36(1)(iii), it could be

ITA NO.295 OF 2009

:-2-:

still allowed under Section 37(1) of the Act.

Consequently, we uphold the order of the Tribunal

on the second issue and following the judgment referred

above on the first issue, the appeal will stand dismissed.

C.N.RAMACHANDRAN NAIR,
Judge.

V.K.MOHANAN,
Judge.

MBS/