2002 (10) TMI 44 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the excess interest taken into account with reference to the loan to the clients over and above the amount permitted under law as per the directions of the Reserve Bank of India is exigible to tax under the Interest-tax Act ? Tribunal has rightly rejected the assessee s contention. The question referred to us is therefore, required to be and is answered in favour of the Revenue and against the assessee.

Summary

The High Court of Madras ruled that excess interest taken by a scheduled bank from a customer, which was later refunded, is taxable under the Interest-tax Act. The bank's claim to reduce interest income for earlier years was rejected. The bank is entitled to a deduction in the year when the excess interest was refunded. The Tribunal's decision was in favor of the Revenue and against the bank.