2003 (6) TMI 171 - AT - Income Tax

Summary

Issues:
1. Appeal against CIT(A)'s order for assessment under s. 143(3) of the IT Act, 1961 for the asst. yr. 1994-95.
2. Whether interest on Government securities and IRFC bonds should be added.
3. Whether income from commercial paper is exigible to interest tax.

Analysis:

Issue 1:
The Revenue's appeal and the assessee's cross-objection were directed against the CIT(A)'s order for assessment under s. 143(3) of the IT Act, 1961 for the assessment year 1994-95. The appeal and cross-objection were consolidated for convenience.

Issue 2:
The Revenue's appeal focused on the addition of Rs. 6,51,22,058 made on account of interest on Government securities and IRFC bonds. The Tribunal referred to previous orders and concluded that the appeal was not sustainable. The Co-ordinate Benches' decisions were followed, leading to the dismissal of the Revenue's appeal.

Issue 3:
Regarding the assessee's cross-objection, the main ground pressed was related to treating income of Rs. 1,07,11,877 on commercial paper as not exigible to interest tax. The Tribunal analyzed the nature of commercial paper transactions and the definition of 'interest' under the Interest-tax Act, 1974. It was concluded that discount on commercial paper should not be subjected to interest tax as it falls under the category of income from securities, not loans and advances. The Tribunal referred to relevant directions and previous decisions to support this conclusion. As a result, ground No. 3 of the cross-objection was allowed, while ground No. 4 was dismissed as not pressed.

In summary, the Revenue's appeal was dismissed, and the assessee's cross-objection was partly allowed based on the detailed analysis and interpretation of the relevant provisions and precedents related to interest tax on income from commercial paper.