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TMI Blog2014 (12) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... mon judgment and order dated 24.02.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench in ITA No.60/AHD/2014 to 64/AHD/2014 whereby, all the appeals filed by the assessee were treated as allowed for statistical purposes. For the sake of convenience, Tax Appeal No.1805/2005 is taken as the lead matter. 3. Briefly stated, the facts are that on 14.03.2002 the respondent-assessee was served a Notice u/s.10 of the Interest Tax Act, 1974 asking to file a return of chargeable interest since it was noticed that the assessee-company was a Finance Company earning interest income from loans advanced by it. The said Notice was duly served upon the assessee on 22.03.2002. During the year under consideration, total interest received was Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.09.2006 on the following substantial questions of law; "(A) Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to exclude the interest earned by the assessee company on the deposit made with other concerns while computing the chargeable interest of the assessee u/s.4 of the Interest Tax Act, 1974? (B) Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to include the net interest only received by the assessee company on refinancing, for the purpose of computing the total chargeable interest under the Act, despite the clear provisions of Explanation to section 6 of the Interest Tax Act, 1974?" 9. We have heard l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest under the Interest Tax Act, 1974? So far as the Question No.1 is concerned, the tribunal has considered the issue as under: We find force in the contention of the Ld. Counsel. Section 2(7) of the Income Tax Act defines as under: 7) Interest means interest on loans and advances made in India and includes - (a) commitment charges on unutilised portion of any credit sanctioned for being availed of India: and (b) discount on promissory notes and bills of exchange drawn or made in India; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was considered as an integral and the interest accruing to the assessee was considered as arising from the entire transactions. It has been further held that the assessee is liable to interest tax only on the net interest received by it. Therefore, in view of that, we are of the opinion that the learned CIT (A) has deleted the addition after following a number of decisions. We find no error in the order of learned CIT (A). Hence, this ground of appeal is rejected in all the Asst. Years." So far as the Question No.3 is concerned, the tribunal has considered the issue as under: "Before us, the learned DR relied upon the order of Assessing Officer, whereas learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 09 ITD 520(DEL) in the case of Oriental Insurance Co., 82 ITD 749 (Mum) in the case of Life Insurance Corporation and 87 ITD 11 (Del) in the case of Punjab National Bank wherein the Tribunal has pointed out disparity in expression Loans and Deposits while discussing the difference of meaning in the expression Loans and Deposits, the Tribunal in the case of Oriental Insurance Co., vs. DCIT reported in 89 ITD 520 (Del) (Supra) observed as under - "In view of the above provisions, the case of the revenue is that deposits with banks and other institutions would fall within the ambit of the word loans. While the case of the assessee is that 'loans' and 'deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the repayment of the deposits in cash exceeding the prescribed limit. It is apparent from these provisions that repayment of the loan in cash is not prohibited. Consequently, no penalty is leviable under Section 271E where repayment of loan is made in cash. On the other hand, penalty is leviable under Section 271E, if deposit is repaid in cash exceeding the prescribed limit. Thus, it is apparent from these provisions that even the legislature has recognizes the distinction between the loan and deposit." Following the above decision, we find merit in this ground and we allow it. We direct the Assessing Officer to exclude the interest earned by assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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