THE COMMISSIONER OF INCOME TAX vs. STATE BANK OF TRAVANCORE

PDF · subscribers

ITA/731/2009HC KeralaKLHC01025492200912 November 2018Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that interest payable on default amounts due under discounted bills of exchange is not chargeable under the Interest Act, 1974. The Court relied on the Supreme Court's decision in State Bank of Patiala v. Commissioner of Income-Tax [(2016) 383 ITR 244 (SC)]. The Supreme Court had clarified that the Interest Act focuses on a narrow taxable event and does not include interest payable on default in payment of amounts due under a discounted bill of exchange. The High Court found that the issues raised concerning interest on refinance and interest on overdue bills were covered by this declaration. Therefore, the appeal was rejected, with the questions answered in favour of the assessee and against the revenue. No order as to costs was made. The High Court did not expressly leave any issue undecided.

What were the facts?

This is an appeal filed by the Commissioner of Income Tax, Thiruvananthapuram, against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated 03-02-2006. The appeal concerns the assessment year(s) not explicitly stated in the provided text. The dispute revolves around the taxability of interest payable on default amounts due under discounted bills of exchange. The procedural history indicates that the ITAT's order is under challenge before the High Court. The amount in dispute is not specified.

What were the issues?

1. Whether interest payable on default amounts due under discounted bills of exchange is chargeable under the Interest Act, 1974 (a question of law). Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, the outcome suggests the assessee's position was that such interest is not chargeable under the Interest Act. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the appeal filed by the Commissioner of Income Tax indicates the revenue's position was that such interest is chargeable.

Which sections of the Income-tax Act were involved?

Interest Act, 1974

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY ,THE 12TH DAY OF NOVEMBER 2018 / 21ST KARTHIKA, 1940 ITA.No. 731 of 2009 AGAINST THE ORDER/JUDGMENT IN TA 12/2000 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 03-02-2006 APPELLANT/S: THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/S: STATE BANK OF TRAVANCORE THIRUVANANTHAPURAM. BY ADVS. SRI.P.J.ANILKUMAR SMT G.MINI(1748) SRI.A.KUMAR SRI.P.S.SREE PRASAD OTHER PRESENT: SRI JOSE JOSEPH SC THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12.11.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No.731/2009 2 JUDGMENT The issue raised in the appeal is as to whether interest payable on default amounts due under discounted bills of exchange would be chargeable under Interest Act, 1974 or not. 2. The Hon'ble Supreme Court is held so in State Bank of Patiala v. Commissioner of Income-Tax [(2016) 383 ITR 244 (SC)] which is extracted herein: "The Interest Act, unlike the Income-Tax Act, 1961 focuses only on a very narrow taxable event which does not include within its ken interest payable on default in payment of amounts due under a discounted bill of exchange"

The issue raised herein are with respect to interest on refinance and interest on overdue bills. Both of which would stand covered under the aforesaid declaration as extracted above.

ITA No.731/2009 3 The appeal would stand rejected answering the questions raised in favour of the assessee and against the revenue. There is no order as to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE

ITA No.731/2009 4 APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 22.11.1999 ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 09.03.2000 ANNEXURE C CERTIFIED COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 03.02.2006

Recent GST High Court judgments

Search GST case law →