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TMI Blog2007 (2) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (for short 'the Tribunal') in ITA No. 6/Chandi/2002 in respect of the assessment year 1995-96 raising the following substantial question of law : "Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in allowing deduction of Rs. 3,50,36,152/- on account of interest on delayed payment of shares received by the assessee from various collaborators in view of the fact that in Section 2 of the Interest Tax Act, for the purpose of chargeability, interest is defined as "interest on loan and advances made in India" and also in view of the fact that the scope of Section 5 of Interest Tax Act is very wide and only specific items excluded are interest on loans an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t received on delayed payments of shares. The learned Assessing Officer has discussed this issue in para 5.3 and 5.4 of the assessment order. During the year under consideration, interest of Rs. 3,50,36,152/- on delayed payment of shares was received by the assessee with various collaborators, whose projects were promoted by the assessee. The assessee promoted them and the payment on purchase of shares were subject to payments of interest at the prescribed rate. The Assessing Officer hold that the interest received on delayed payment of shares was includable in the value of chargeable interest, consequent addition of Rs. 3,50,36,152/-which was reversed by the learned Commissioner of Income-tax (Appeals). Section 2(7) of the Interest Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax as interest under the Act is interest on loans and advances. This definition being in aid to charging section deserves a strict interpretation. The amount which is sought to be added in the interest income of the assessee in the present case is not on account of interest income on any loan or advances disbursed by the assessee to the loanees rather the said amount was invested by the assessee as equity participation in various industrial concerns. It is only on account of delayed payment, if any, on account of purchase of those shares by the promoters that interest on the outstanding amount was charged. The amount so charged cannot, in any way, be termed as interest on the loans or advances. The amount invested in equity participation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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