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TMI Blog2017 (7) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts. The income arising out of such activity would therefore not be the assessee's income from the business of providing longterm finance. As noted, counsel for the assessee had sought to press in service the principle of consistency by producing certain returns and assessment orders for the earlier years. However, no such documents were produced before the lower authorities, no attempt was made to advance and develop these arguments. For the first time before the High Court, we would not permit raising of such a ground which would essentially require examination of basic facts. Whether in earlier assessment years such a precise question had come up, whether the returns filed by the assessee were accepted after scrutiny or otherwise and whether in such scrutiny assessments, this issue was considered by the Revenue, are issues which cannot without proper examination of facts, be gone into. At this stage therefore, we do not enter into this arena. - TAX APPEAL NO. 383 of 2017 TO TAX APPEAL NO. 389 of 2017 - - - Dated:- 18-7-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Appellant : Mr.J.P.shah, Ld. Advocate for Mr Manish J Shah, Advocate COMMON ORAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the deduction should be granted. The assessee contended that it was engaged in the business of providing longterm finance and the housing loan was given for the period not less than five years. Once such longterm housing finance was made available and necessary reserve was created, the deduction under section 36(1)(viii) of the Act would be available. 3. The assessee further pointed out that after transfer of a particular portfolio, the HDFC had claimed deduction in respect of such portfolio of long term housing finance to the extent of interest received by it. The assessee even after the transfer of the portfolio, would retain a part of the interest received from the loanee and it is this interest component on which the assessee claimed the deduction. The Assessing Officer considered the contentions of the assessee but, found that the same cannot be accepted. He was of the opinion that once the portfolio was transferred, the assessee was no longer engaged in the business of long term housing finance with respect to such loan. Any income arising out of the said transaction would not be eligible for deduction under section 36(1)(viii) of the Act. He observed that the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would retain 6.75% transferring the rest to HDFC. It is towards this retention money that the assessee claimed deduction. The Tribunal committed a serious error in rejecting the assessee's claim. Counsel produced documents pertaining to the assessment of the assessee for the earlier years and contended that in the earlier years, the claim under similar circumstances was accepted by the Revenue. For the later years, a different view cannot be taken. 6. To appreciate the precise nature of the transfer and the manner in which the assessee earns or retains the interest income, we had requested the learned counsel to produce a sample copy of the agreement between the assessee and the HDFC. Under this agreement, a loan portfolio would be transferred. We would refer to this document at a later stage. For the time being, we may recall that the assessee had during the period relevant to the assessment year in question, transferred 5112 portfolios, of which, 793 were of a period more than five years. The rest were before the end of such term and as observed by the Assessing Officer in many cases, the transfer took place barely within a few months of sanctioning the loans. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remit the Amounts Due received in respect of the Assigned Receivables to the Beneficiary every month in such manner as may be directed by the Beneficiary so as to reach the Beneficiary by the end of the month for which the same are due. 6.2 The Seller shall be entitled to retain the residual from the interest component of each EMI after paying interest to the Beneficiary (in addition to the entire principal component of the EMI) at the rate of 6.75% per annum, on an annual rest basis. 10. Article XI provided as under: The Seller agrees that the Seller shall hold all the Amounts Due, Prepayment and Prepayment Premia as and when received and or collected by it in respect of the Receivables in trust for and for the benefit of the Beneficiary and that the full legal title in the Receivables shall be held by the Seller in trust for and for the benefit of the Beneficiary and shall deal with the same only in accordance with this Agreement. 11. It can be seen that under the said agreement, the assessee transferred number of loan portfolios to the HDFC in lieu of HDFC paying sale consideration. Despite the transfer, the seller continued as a receiving and paying ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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