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TMI Blog2011 (5) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... erest Tax showing chargeable interest of Rs.12,26,652/-. b) The Assessing Officer in computation of chargeable interest for the levy of the interest tax for the said period under Section 8(2) of the Interest Tax Act arrived at the figure of Rs.32,36,080/- after addition of Rs.20,09,431/- on account of bill discounting charge. c) Being dissatisfied, the assessee preferred an appeal against the said order and one of the points taken in the appeal was that the appellant was not at all chargeable to Interest Tax Act and due to mistake, the return was submitted under the said Act. d) The Commissioner of Income-tax (Appeals), however, turned down such point and held that the appellant was a Credit Institution within the meaning of Sections 2(5A) and 2(5B) of the said Act. The said appellate authority further turned down the claim of the appellant that the income from brokerage and syndicate fees could not come within the purview of interest and thus, was not chargeable under the Interest Tax Act. The appeal filed by the appellant was, thus, dismissed. e) Being dissatisfied, the appellant preferred an appeal before the Tribunal below and by the order impugned here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) a public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956); (iii) a State financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951); and (iv) any other financial company; (5B) "financial company" means a company, other than a company referred to in sub-clause (i), (ii) or (iii) of clause (5A), being - (i) a hire-purchase finance company, that is to say, a company which carries on, as its principal business, hire-purchase transactions or the financing of such transactions; (ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debenture stock, or securities issued by the Government or a local authority, or other marketable securities of a like nature; (iii) a housing finance company, that is to say, a company which carries on, as its principal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined sub-section (1) but subject to the other provisions of this Act, there shall be charged on every credit institution for every assessment year commencing on and from the 1st day of April, 1992, interest-tax in respect of its chargeable interest of the previous year at the rate of three per cent of such chargeable interest. Provided that the rate at which interest-tax shall be charged in respect of any chargeable interest accruing or arising after the 31st day of March, 1997, shall be two per cent. of such chargeable interest. "5. SCOPE OF CHARGEABLE INTEREST. Subject to the provisions of this Act, the chargeable interest of any previous year of a credit institution shall be the total amount of interest (other than interest on loans and advances made to other credit institutions or to any co-operative society engaged in carrying on the business of banking) accruing or arising to the credit institution in that previous year : Provided that any interest in relation to categories of bad or doubtful debts referred to in section 43D of the Income-tax Act shall be deemed to accrue or arise to the credit institution in the previous year in which it is credited by the credit ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been dismissed only on the ground of estoppel. We, therefore, answer the first point by holding that there is no estoppel against a person for filing a return under the Act if he is otherwise really found to be not subject to the tax and at the same time, hold that the Tribunal has not dismissed the claim of the appellant solely on the ground of estoppel. 5. As regards the second point formulated by the Division Bench, we find that the appellant is definitely a "credit institution" within the meaning of Section 2(5A) of the Act being "any other financial company" within the meaning of clause (iv) of the said Section 2(5A) as it comes within the purview of at least a loan company, that is to say, a company [not being a company referred to in subclauses (i) to (iii)] which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise within the meaning of clause (iv) of Section 2 (5B) of the Act. It appears from its financial statements that it gives advances to others and also makes arrangements for providing loan to others by taking brokerage and syndication fees and thus, falls within the purview of the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion fees should be treated to be the income of the appellant for all practical purposes including the purpose of ascertaining the principal business of the assessee. The income under the heading brokerage and syndication fees is also received by the appellant from its business of providing finance to others through other financiers though it does not amount to interest. Thus, if we take into account the said amount as its income from business for providing finance to others, it would appear that more than 50% income of the appellant comes from the business of providing finance to others and thus, the principal business of the appellant is to provide finance to others either by giving such loan by itself or by making arrangement for loan through others thereby bringing itself within the purview of a credit institution. 10. We, thus, answer the last question formulated by the Division Bench by holding that on the facts and in the circumstances of the case although the income of the assessee by way of syndication fees and brokerages, are in the nature of professional income, not forming any part of chargeable interest for the purpose of taxation under the Interest Tax Act and those s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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