Kerala Financial Corporation vs Assistant Commissioner of Income Tax

K.M. Joseph, J.—This appeal is filed u/s 260A of the Income Tax Act. The appellant is the Kerala Financial Corporation. The appellant filed its return for the assessment year 2008-2009 declaring a total loss of Rs.1,37,34,398/-. The case was selected for scrutiny. The assessing officer completed the assessment assessing a total income at Rs.45,54,15,830/-. In the appeal filed by the appellant before the Commissioner, partial relief was granted. Being aggrieved by the said order to the extent the same confirmed the additions, the appellant preferred further appeal. In that appeal, the Tribunal remanded the matter back for consideration. The main issue with which we are concerned is the additions made in respect of OTS collection and revenue recovery collection. In respect of these two items, the matter was remanded to the authorities below. Following are the findings which we noticed at paragraph 4.3. of the order of the Tribunal:

4.3. We notice that the tax authorities have not examined the above said submissions made by the assessee. In our view, the assessee has explained the circumstances under which it had agreed to the proposal of the assessing officer to assess the amount available in Suspense account. According to the assessee, the situation has changed in the instant year and it would be in a position to explain each receipt with the documents pertaining to the concerned borrower. Under these set of fats, in our view, it may not be proper to assess the entire collections simply for the reason that in the earlier years, the assessee has agreed for the assessment of the amount available in Suspense account. In our view, the assessing officer is obliged to consider the explanations of the assessee with reference to the terms and conditions relating to the concerned borrower and then only, in our view, he would be in a position to determine about the tax ability of these receipts. Admittedly, this exercise has not been carried out by the assessing officer. Before us, the assessee has furnished copies of Recovery policy 2007 - 08, which lists out the terms and conditions relating to OTS scheme, which also requires to be considered by the AO. In the absence of basic fact relating to these receipts we are also not in a position to express any opinion. Accordingly, in our view this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT (A) on this issue and restore the same to the file of the assessing officer with the direction to examine the nature of each of the receipts accounted under these two heads with reference to the relevant documents and take appropriate decision in accordance with the law.

We heard the learned counsel for the appellant and the learned counsel for the Revenue.

The learned counsel for the appellant would point out that the issue is squarely covered in favour of the appellant by virtue of the decision in Commissioner of Income Tax Vs. Haryana Financial Corporation, .

We find that this a case where actually the Tribunal has not rendered finding in view of non availability of materials before it and the assessing authority has been directed to re do the matter. In such circumstances, we do not find any reason to consider this matter. We only make it clear that when the matter is re-done pursuant to the remand, the authority will also consider the decision in Commissioner of Income Tax v. Harayana Financial Corporation(cited supra). Subject to the same the appeal is disposed of.