9911796707
TMI Blog2005 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the activities of borrowing money and lending money to the members of the petitioner is similar to the one that is carried on by bankers, which accepts deposits from the depositors and lends money to various borrowers - Tribunal is right in confirming the demand without considering whether the appellant carries on the business of banking after satisfying the various norms laid down in the Banking Regulation Act - Tribunal is right in law in holding that the Interest-tax Act would be applicable to the petitioner - - - - - Dated:- 23-12-2005 - Judge(s) : K. RAVIRAJA PANDIAN., P. P. S. JANARTHANA RAJA. JUDGMENT The judgment of the court was delivered by P. P. S. JANARTHANA RAJA J.- The following substantial questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly held that no authority is to be influenced by the order passed by the single judge of the Madras High Court and should pass an order independently after application of mind? 7. Whether on the facts and in the circumstances of the case, the Tribunal is right in confirming the demand without considering whether the appellant carries on the business of banking after satisfying the various norms laid down in the Banking Regulation Act?" The facts needed to the above questions of law are as under: The appellant is a co-operative thrift and credit society registered under the provisions of the Multi-State Co-operative Societies Act. The relevant assessment year is 1992-93 and the corresponding accounting year ended on March 31, 1992. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by holding that the appellant society is a credit institution within the meaning of section 2(5A) of the Interest-tax Act and holding that the appellant society is engaged in banking within the purview of the said section. The Assessing Officer also computed chargeable interest at Rs. 8,00,000 as against Rs. 6,96,159 filed by the appellant for the period from October 1991 to March 1992. Aggrieved by the order, the appellant filed an appeal to the Commissioner of Income-tax (Appeals) and raised the issue of jurisdiction as well as assessment of interest tax. The first appellate authority dismissed the appeal but reduced the chargeable interest from Rs. 8,00,000 to Rs. 6,96,159, on verification by the Assessing Officer of the same. Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the purview of the Interest-tax Act. Since the petitioner in the instant case does not carry on the business of banking either under the provisions of the Interest-tax Act or under the Banking Regulation Act, it would not be liable; (vii) that the crucial and material issue as to whether the appellant carries on the business of banking after satisfying the various norms laid down by the Banking Regulation Act, has not been considered. Hearing the above arguments advanced by learned counsel for the appellant, the Income-tax Appellate Tribunal held that the interest-tax shall be attracted to the appellant assessee and affirmed the order of the authorities below. Counsel appearing for the appellant-society submitted that the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing credit facilities to farmers or village artisans." This sub-section (5A) was inserted by the Finance (No.2) Act, 1991, with effect from October 1, 1991, and by the Finance Act 1992, the words in a square brackets in the above sub-section, namely" or a co-operative society engaged in carrying on the business of banking not being a cooperative society providing credit facilities to farmers or village artisans" were omitted with effect from April 1, 1993. Accordingly these words were part of clause (5A) of section 2 of the Act from October 1, 1991, to March 31, 1993. Thus, going by the relevant provisions it may be seen that by the charging section in respect of credit institution other than scheduled banks, interest tax is charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit institution for the purpose of levy of interest under the Interest-tax Act, 1974. The other argument of counsel for the appellant was that the assessee not being a banking company and the provisions of the Banking Regulation Act not being made applicable, cannot be taken as a credit institution. We feel that the term "a co-operative society engaged in carrying on the business of banking" refers to a particular kind of co-operative society and it need not necessarily be a banking company or a company to which the provisions of the Banking Regulation Act are made applicable. In view of the above, we are of the opinion that the interest-tax is attracted to the appellant-society and the Revenue rightly initiated interest-tax proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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