9911796707
TMI Blog2011 (6) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... a, in Interest Tax Appeal No.11(Cal) of 1997 relating to the Assessment Year 1992-93 dismissing the appeal field by the assessee. 2. The facts giving rise to filing of this appeal may be summed up thus: a) The appellant is a company mainly engaged in the business of insurance other than that of life insurance. The petitioner company is also categorized as Public Financial Institution under Section 4A of the Companies Act, 1956 and is also engaged in the investment activities like purchase and sale of shares, debentures, bonds, government securities etc. As part of its investment business, the appellant also provides various types of loans and advances to different companies as well as Credit Institutions under different sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included by the Assessing Officer in the appellant's chargeable interest computed under Section 5 read with Section 6 of the Act. e) Being dissatisfied, the appellant preferred an appeal before the Tribunal below. The said Tribunal by order dated 19th December, 2003 came to the conclusion that call money did not fall within the ambit of chargeable interest, but so far the interest on bills rediscounting scheme with banks were concerned, the same was chargeable as interest. f) Being dissatisfied, the appeal has come up with the present appeal. 3. A Division Bench of this Court by order dated 28th April, 2004 formulated the following substantial questions of law for determination: "I. Whether on the facts and in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bills rediscounting scheme from different banking companies to which the Banking Regulation Act, 1949 applies should form part of chargeable interest within the meaning of Section 2(5) read with Sections 5 and 6 of the Interest Tax Act. 5. In order to appreciate the question involved herein, it will be profitable to refer to the following provisions of the Interest Tax Act which are quoted below: "Definitions. 2. In this Act, unless the context otherwise requires, - (1) "assessee" means a person by whom interest-tax, or any other sum of money is payable under this Act and includes - (a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his chargeable interest or of the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 business, the business of financing of acquisition or construction of houses, including acquisition or development of land in conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o other credit institutions 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 institution to its profit and loss account for that year or, as the case may be, in which it is actually received by the credit institution, whichever is earlier. "Computation of chargeable interest. 6. (1) Subject to the provisions of sub-section (2), in computing the chargeable interest of a previous year, there shall be allowed from the total amount of interest other than interest on loans an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Companies Act, 1956 (1 of 1956) and thus, is an assessee under the Act. It appears from the definition of the interest as provided in Section 2(7) of the Act, "interest" means interest on loans and advances made in India and includes- a) commitment charges on unutilized portion of any credit sanctioned for being availed on in India and b) discount on promissory notes and bills of exchange drawn or made in India, but does not include- i) interest referred to in subsection (1B) of Section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) and ii) discount on treasury bills. Therefore, interest received by the assessee under the bills rediscounting scheme from different banking companies to which the Banking Regulation Act, 1949 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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