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TMI Blog2014 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest Tax Act, 1974. Interest as defined in sub-section (7) of Section 2 of the Interest tax Act, 1974 means interest on loans and advances made in India and includes commitment charges on unutilized portion of any credit sanctioned for being availed of in India; and discount on promissory notes and bills of exchange drawn or made in India excluding discount on treasury bills and interest referred to in sub-section (1B) of section 42 of the Reserve Bank of India Act, 1934. As such, the interests received on debentures, bonds, securities and deposits is logically outside the preview of the above -mentioned provisions of law as these assets are not loans and advances. However, notwithstanding the above, the Ld. Deputy Commissioner of Interest Tax has added the following amount aggregating to ₹ 49,51,80,631`/- comprising interest received on debentures, bonds, securities and deposits on the basis of a clarification by the Central Board of Direct Taxes (vide instruction no. 1923 dated 14.03.1995) suggesting that interest on debentures, bonds, securities etc. and deposits is also subject to Interest-tax Act. i) Interest of debentures, bonds and securities 28,02,01,446 ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 The assessee company has filed the details of interest claimed in the return of chargeable interest and the same are supported by the accounting policy of the assessee company. The above mentioned interest has been claimed on the bona-fide belief that it is allowable in computing its chargeable interest it is further submitted that without finding any mistake in the accounts merely disallowance of a claim which was not accepted or was not acceptable to Revenue, that by itself would not attract penalty under section 271(1)(c) of ht I. T. Act, 1961 as held by the Hon'ble Supreme Court in the case of CIT Vs Reliance Products Ltd. (2010) 189 Taxman 322 (S.C.). 3.4 It has further been submitted that no penalty can be imposed for disallowance of a claim made on the bona fide belief as held by the Hon'ble Supreme Court in the case of Hindustan Steel Limited Vs State of Orissa (1972) 83 ITR 26 (S.C.). Reliance has also been placed on the following cases: a) CIT Vs International Audio Visual Co. (2007) 288 ITR 5760 (Del.) b) CIT Vs Skyline Auto products Pvt. Ltd. (2004) 271 ITR 335 (MP) c) CIT Vs Ajit Singh and Co. (2002) 253 ITR 630 (P&H) 3.5 Reliance is also placed on the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty whose action is illegal and unwarranted and needs to be reversed. It was thus pleaded for reversal of the impugned order. 6. Ld. Counsel for the assessee Shri Tarandeep Singh, while supporting the order of Ld. CIT(A) in this regard has pleaded that the definition of 'interest' which can be considered in this case, is the definition as given under the Interest Tax Act and not under the I. T. Act, 1961 which duly covers this situation and neither nay interest tax could be levied nor penalty is warranted and despite that the assessee has not filed any appeal, the case does not warrant levy of penalty. Moreover, definition of interest as given in the Interest Tax Act contains the word mention of include. So, it is exclusive by relying upon the case of Mahalaxmi Oil Mills Vs State of A.P. AIR (1989) S.C. 335 and other reported in AIR (1995) S.C. 1395. It was contended to uphold ht order of Ld. CIT(A). Assessee further placed reliance on the case of the assessee decided by ITAT in favour of the assessee for the assessment year 1996-97 and 1997-98 and next reliance was placed on the case of National Insurance Co. Ltd. Vs CIT & Another reported in 339 ITR 573 (Cal.), G E Capital T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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