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TMI Blog2012 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... R. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Sanjeev Sabharwal, sr. standing counsel For Respondent: Mr. O S Bajpai, Sr. Adv. with Mr.V.N. Jha and Ms. Manasvini Bajpai, Advs. SANJIV KHANNA, J: (ORAL) Vide order dated 11.9.2009, the following substantial questions of law were framed : (a) Whether the ITAT was correct in law in holding that the Assessee is neither a financial company nor a credit institution in terms of Section 2(5B) of the Interest Tax Act, 1974 and as such was not a taxable entity for the purpose of Interest Tax Act, 1974? (b) Whether the ITAT was correct in law in holding that for deciding principal business of a taxable entity under the Interest Tax Act, 1974 only receipt from business is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- b) This question is decided in the negative, i.e., in favour of the Revenue and against the assessee. a) c) Since the ITAT did not apply the correct principle had based on its decision in Rajath Leasing Finance Ltd. (supra), decision of the Tribunal is set aside. At the same time, it is not possible to conclusively determine, in these proceedings, as to whether the assessee company is a financial company or a credit institution or not. For this purpose matter is remitted back to the AO for fresh determination keeping in view correct criteria as stated in this order. 3. The respondent-assessee thereafter preferred a special leave to appeal which was admitted and Civil Appeal No.556-559/2009 were registered. The appeals were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) went into various factual details. The CIT (Appeals) recorded a finding that the principal business undertaken by the assessee was hire purchase and bill discounting and therefore the assessee is a financing company under Section 2(5B) of the Act. He observed that hire purchase activity scores over the activity of leasing. The parameter to determine principal activity is not restricted to receipts but required examination of turnover, capital employment, head count in each line of business etc. 6. However, the CIT(Appeals) held that amount received under the hire purchase agreements were not in the nature of finance or in the nature of advance on loan and therefore cannot be brought to tax under the Act. Similarly, the lease char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um, namely, reopening of the proceedings, the nature of the business carried on by the assessee, whether the assessee was a credit institution as defined in Section 2(5A) of the 1974 Act and on the merits of the case whether the A.O. was right in taxing the hire-purchase charges, the lease and bill discounting charges. One more point may be mentioned. The dichotomy between the operating lease and financial lease was never raised by the Department. As stated above, the C.I.T. had examined the nature of the transactions entered into by the assessee and the three components of the receipt of the assessee under the 1974 Act. (see page 98 of the S.L.P. Paper Book). As stated, several questions stood raised in the appeal(s) filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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