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TMI Blog2016 (6) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is to provide loan and main source of its income is interest. In view of all these, the questions of law framed for our consideration are required to be answered against the assessee and in favour of the department. - TAX APPEAL NO. 1253 of 2006 TO TAX APPEAL NO. 1257 of 2006 - - - Dated:- 15-6-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR SOPARKAR FOR MRS SWATI SOPARKAR, ADVOCATE FOR THE OPPONENT : MR KM PARIKH, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By filing these appeals, the assessee has challenged order dated 21.4.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in Int.TA Nos.66 to 70/Ahd/2003 for the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest Act? 3. At the time of hearing of these appeals, Mr.Soparkar, learned counsel for the appellant has taken us through Section 2 (5B) of the Interest Act, 1974 which provides for the definition of a ' financial company . Said Section reads as under:- 2.(5B) financial company means a company, other than a company referred to in sub- clause (i), (ii) or (iii) of clause (5A), being- (i) a hire- purchase finance company, that is to say, a company which carries on, as its principal business, hirepurchase transactions or the financing of such transactions; (ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in the preceding sub- clauses;] 4. He submitted that the assessee is not a financial company as per Clause (v) of Section 2 (5B) of the Act, and it cannot be said that the principal activity of the assessee was disbursement of loan. He further submitted that income of the assessee from the interest was only ₹ 4,86,162/- for the A.Y. 1994-95, it was ₹ 3,25,237/- for the A.Y. 1995-96 while service charge received for the same A.Ys. were ₹ 5,40,132/-, ₹ 3,95,405/- and same is the position for other Assessment Years. He, therefore, submitted that the Tribunal has committed an error in passing the impugned order. In support of his submissions, he has relied upon the decision of the Kerala High Court in Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent would fall under sub-clauses (v-a) or (vi). 4. Even though the appellants have relied on notes and clauses explaining the scope of financial company reported in 194 ITR (Statutes) 206, on going through the same, we do not find, the assessee is engaged in the business as contemplated in sub-clause (v-a). Even though counsel submitted that the assessee is collecting kuri I.T.A.Nos.199 of 2009 and connected cases subscription and paying prize amount, we do not think, the contributions or subscriptions referred to in sub- clause (v-a) relate to chitty subscription. In our view, the question whether the assessee would fall within the definition of 'finance company' should be considered with reference to the object of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet as on 31.3.1994, it is clear that the assessee had given ₹ 89,95,449/- towards unsecured loan. He has taken us through other balance sheets and submitted that same is the position in other years also. Therefore, he submitted that the principle business of the assessee is to provide loan and considering its income from interest, the assessee is a financial company and the Tribunal has not committed any error while passing impugned order. He, therefore, prayed that these appeals may be dismissed. 7. We have heard learned counsel for both sides. We have also gone through the provisions of law and the material on record. While passing the impugned order, the Tribunal has observed as under:- 7. On the basis of above chart, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances, it cannot be said that the principal business was not granting loan. It would, in our opinion, fall within the definition of section 2(5B)(iv) of the Act which reads as under:- (iv) a loan company, that is to say, a company [not being a company referred to in sub-clauses (i) to (Hi)] which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise The decision in the case of Tara Finvest Ltd. (supra) is of no help to the assessee because in that case a finding has been given by the Tribunal that the assessee's principal business was paper trading company and loans and advances have been made to the companies or firms in which the directors were interested ..... X X X X Extracts X X X X X X X X Extracts X X X X
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