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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 ..... ision in COMMISSIONER OF INCOME TAXGANDHI NAGAR Versus GUJARAT INDUSTRIAL INVESTMENT CORPORATION [2006 (8) TMI 581 - GUJARAT HIGH COURT] - investment in debenture could never be equated with the advancement of loans made in India - loans given by the assessee to ultimate borrowers were part of an overall scheme laid down and controller by IDBI/SIDBI and the assessee has no discretion in respect of any part of the transaction, therefore, such transaction was considered as an integral and the interest accruing to the assessee was considered as arising from the entire transactions - the assessee is liable to interest tax only on the net interest received by it – the amount received by the assessee in the shape of fees cum service charges canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 ₹ 64,24,776/- and u/s.5 of the said Act, the assessee was liable to pay interest tax on the interest income received. 4. In response to the Notice, the assessee filed reply stating that the company does not fall within the definition of Finance Company u/s.2(5A) and 2(5B) of the said Act. The assessee-company did not file the return of chargeable interest in the given time. Therefore, fresh Notices u/s.8(1) as also u/s.23 of the said Act was issued to the assessee. 5. Thereafter, the return of chargeable interest was filed on 26.02.2003 declaring total chargeable interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 learned Senior Standing Counsel appearing for the Revenue. The questions of law raised in these appeals are already concluded by the decision rendered by a coordinate Bench of this Court in Tax Appeal No.1523/2005 to 1528/2005 decided on 24.08.2006. The question no. (A) raised in this group of appeals is akin to question no.(4) whereas, question no.(B) is akin to question no.(2) in the aforesaid group of appeals. The following substantial questions of law are proposed for admission of these appeals. 1. Whether the Appellate Tribunal is right in law in holding that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on treasury bills: (S) Prescribed means prescribed by Rules made under this Act: (10) all other words and expressions used herein but not defined and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act. 9. Thus, investment in debenture could never be equated with the advancement of loans made in India. Hence, following the decision of ITAT, we find no merit in this ground of appeal, it is rejected in all the Asst. Years. So far as the Question No.2 is concerned, the tribunal has considered the issue as under: We have duly considered the rival contentions and perused the finding of the Ld. CIT (Appeal). The ITAT in the case of Karur Vys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So far as the Question No.4 is concerned, the tribunal has considered the issue as under: In the Cross Objections, first grievance of the assessee relates inclusion of interest earned from deposits made with other Corporations / Finance Institutions. According to assessee, there is a distinction between loans and deposits. The interest earned from loan is only includable in the total chargeable interest as contemplated in the definition of interest provided in this Section 2(7) of the Interests Act. However, the learned Revenue Authorities below did not accept this contention of the assessee and included the interest from deposits with the Financial Institutions in the total chargeable interest of the assessee for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r his use with or without compensation. Consequently, the deposit is repayable only on demand by the depositors without the debtor having to seek out the creditor, while in the case of the loan, the obligation to repay is forthwith incur (though the obligation may have to be discharged in future) and the borrower must seek out the lender to repay the loan. Even the Legislature has made distinction between these two terms. Limitation Act prescribes the different period of limitation, i.e. three years from the date when the loan is made, while in the case of deposit, it is three years from the date when the demand is made. Even the Income Tax Act, 1961, has made distinction between these two terms. Section 269SS prohibits acceptance of loan o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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