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TMI Blog2013 (12) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... end income. Nothing has been brought on record by the Revenue to show that the finding of ld. CIT(Appeals) is not according to facts. We are therefore not inclined to interfere with the order of ld. CIT(Appeals) - I.T.A. No.: 1600/Kol./ 2011 - - - Dated:- 19-12-2013 - Shri Mahavir Singh (Judicial Member) and Shri Abraham P. George (Accountant Member) Shri V. Appala Raju, Addl. CIT, Sr. D.R., for the Appellant Shri Ravi Tulsyan, A.R., for the Respondent ORDER Per Abraham P. Geroge: 1. In this appeal filed by the Revenue, it assails the deletion of an addition of ₹ 1,60,00,000/- made by the Assessing Officer under section 2(22)(e) of the Income Tax Act, 1961 (in short The Act ), vide its Grounds No. 1 2. 2. Facts apropos are that assessee engaged in the business of trading in bullion had filed its return for the impugned assessment year declaring an income of ₹ 1,62,09,940/-. During the course of assessment proceedings, Assessing Officer noted that assessee was holding 10.03% of equity shares of one M/s. Chandra s Chemical Enterprises (P) Ltd. and 12% of equity shares of M/s. D.L. Jewels (P) Ltd. Assessee had received unsecured loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan per se. 4. Ld. CIT(Appeals) was appreciative of these contentions. According to him, the sums were for a specific period at specified interest rate. Interest was also paid by the assessee after deducting tax. Relying on the decision of the Hon ble Delhi High Court in the case of CIT -vs.- Ankitek Pvt. Ltd. [340 ITR 42], ld. CIT(Appeals) held that deposits received in normal course of business could not be considered as loans and advances for the purpose of application of section 2(22)(e) of the Act. Taking this view, he deleted the addition. 5. Now before us, ld. D.R. strongly assailing the order of ld. CIT(Appeals) submitted that assessee itself had shown the amount as loan in its Balance-sheet. It, therefore, cannot say that such amounts were inter-corporate deposits. Ld. CIT(Appeals) had reached a conclusion without properly appreciating the nature of amounts received. Therefore, according to him, ld. CIT(Appeals) fell in error in deleting the additions under section 2(22)(e) of the Act. 6. Per contra ld. A.R. supported the order of ld. CIT(Appeals). He also relied on the decision of coordinate Bench of this Tribunal in the case of IFB Agro Industries Limited -vs.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 160,50,820 160,50,820 Annexure-B Date Particulars Vch Type Vch No. Debit Credit 16.11.2007 Dr Current Account UTI, CIT Road Ch. No. 756988 on SBI towards ICD against 10% interest per annum for 137 days. Receipt 139 10,00,000 31.3.2008 Dr. Interest on ICDs being interest for the year from 1.4.2007 to 31.3.2008 on ICD provided Journal 24 37,432 Cr Current Account UTI, CIT Road Ch. No. 149245 to 149248 towards interest on ICD for FY 07-08 TDS @ 22.66% deducted Payment 415 37,432 37,432 1037,432 1000,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by an assessee cannot be treated as a loan for that section. Here, we may also mention that in section 269T of the Act, the term deposit has been explained vide various circular issued by CBDT. Thus, the view taken by the Ld. CIT(A) that the Intercorporate deposit is similar to the loan would no longer have legs to stand. A perusal of the decision of Hon ble Special Bench of this Tribunal in the case of Gujarat Gas Financial Services Ltd. referred to supra, clearly shows that the Hon ble Special Bench had taken into consideration the decision of the Special Bench of this Tribunal in the case of Housing Urban Development Corporation Ltd. reported in 102 TTJ (Del.)(SB) 936 to come to the conclusion that loans and deposits are to be taken different and distinct. Further, in view of the decision of Hon ble Coordinate Bench of this Tribunal in the case of Bombay Oil Industries Ltd., referred to supra, wherein the coordinate bench of this Tribunal has held as follows: 10. We have heard the rival submissions and perused the material on record. The authorities below have not controverted the claim of the assessee company that the amount received from above three companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the AO the assessee as regards income from ICD the assessee company accepted this interest of ₹ 1,21,54,153 along with interest on bill discount ng ₹ 1,48,74,208 and other interest of ₹ 3,66,184 can be bought under the purview of the Interest-tax Act, 1974. However before CIT(A) it was submitted that these are nterest on deposits and the nature is that of the investment and so interest-tax being leviable on loans and advances and not on fixed deposits, the amount was not to be included. The CIT(A) held: I have carefully considered the matter and find that the definition of interest does not speak of excluding this amount in its definition. Accordingly therefore, the inclusion by the AO of these items is found justified and is upheld. 69. The submission of the assessee is that these ICDs being neither loans or advances, interest earned on these is not exigibte to interest tax in view of the decision of Ahmedabad Tribunal in the case of Utkarsh Fincap (P) Ltd. vs. ITO (2006) 101 TTJ (Ahd) 210. Reliance is also placed on the decision of Housing Urban Development Corporation Ltd. vs. Jt. CIT (2006) 102 TTJ (Del) (SB) 936 : (2006) 5 SOT 918 (Del)(SB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be strictly construed and the subject cannot be taxed unless comes within the letter of law. The argument that a particular income falls within the spirit of the law cannot be availed of by the Revenue. It is trite law that no tax can be imposed on the subject without the words in the Act. No tax can be imposed by inference or analogy. The cardinal principle of interpretation of fiscal law is that it should be considered strictly. In view of the above, the interest in ICDS unless they clearly fall within the meaning of interest on loans and advances would not be taxable. ICD can neither be a loan not an advance. Therefore, the AO is directed to exclude the interest on ICD from the assessment of the assessee. Consequently, the levy of penalty made would also not stand. They are, accordingly deleted. 71. It has considered the decision of Bajaj Auto Holdings Ltd.s case (supra) referred to by the CIT(A) and distinguished by stating that Mumbai Bench has proceeded on a footing that deposit would be an advance. and would be includible n the term with interest on deposit and advance. The Bombay Bench is more persuaded by the reason that the interest on deposit was not excluded fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under the definition of interest as given in s. 2(7) of the Act and as such would not be liable to interest tax. The answer to the question under reference in our humble opinion is that investments made by way of short-term deposits and also in the form of securities and bonds cannot be considered as loans and advances and as such interest thereon shall be outside the scope of interest defined under s. 2(7) of the Act. 74. In these circumstances we hold that interest on ICDs is not an interest on loan or advance therefore would not be includible in the chargeable interest under the Interest tax Act. From the above it is clear there is distinction between deposits vis-a-vis loans/advances. s. 2(22)(e) enacts a deeming fiction whereby the scope and ambit of the word dividend has been enlarged to bring within its sweep certain payments made by a company as per the situations enumerated in the section. Such a deeming fiction would not be given a wider meaning than what it purports to do. The provisions would necessarily be accorded strict interpretation and the ambit of the f ction would not be pressed beyond its true limits. The requisite condition for invoking s. 2(22)(e) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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