9911796707
TMI Blog2004 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... in limine. - - - - - Dated:- 17-11-2004 - Judge(s) : N. K. SUD., HEMANT GUPTA. JUDGMENT The judgment of the court was delivered by N.K. Sud J.- This order will dispose of two appeals, viz., I.T.A. Nos. 194 and 195 of 2004 filed by the assessee under section 21 of the Interest-tax Act, 1974 (for short "the Act"), read with lection 260A of the Income-tax Act, 1961, against the common order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short "the Tribunal"), dated March 31, 2004, relating to the assessment years 1992-93 and 1993-94. For the assessment year 1992-93, the assessee had filed its return under the Act on February 21, 1992, declaring chargeable interest as under: Rs. (i) Hire-purchase charges earned 4,75,745 (ii) Interest other than hire-purchase earned 2,282 Total 4,78,027 This return was subsequently revised on November 10, 1993, declaring chargeable interest at nil. The assessee claimed that the hire-purchase charges were not covered under the provisions of section 4(2) of the Act as the same pertained to arrangements for use of finance. It was contended that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1993-94 was completed on March 14, 1996, and the chargeable interest was computed as under: Rs. (i) Hire-purchase charges 8,94,859 (ii) Interest earned 2,267 (iii) Interest on Kisan Vikas Patras 7,178 Total 9,04,304 The assessee preferred appeals before the Commissioner of Interest-tax (Appeals), Jalandhar. The appeal for the assessment year 1992-93 was dismissed vide order dated February 29, 1996 and the findings of the Assessing Officer that the hire charges fell within the scope of the definition of "interest" under section 2(7) of the Act and were liable to tax under section 4(2) of the Act were upheld. The Commissioner of Interest-tax (Appeals) analysed the hire-purchase transactions in two cases, namely, Roor Singh and Pardeep Kumar, and held that the hire-purchase arrangement was basically an arrangement of advancing money by the assessee to the customers or on their behalf to the dealer and recovering the money so advanced through instalments after calculating interest chargeable on the principal amount. He further observed that the hire-purchase agreement and the endorsement in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer may be advised to examine each transaction in the above light and charge interest-tax in such of those transactions which are not in the nature of hire-purchase. A careful reading of the extracts of the above circular divulges that all the hire-purchase transactions cannot be construed as financing transactions and it is not open to the Department to levy tax on the hire charges resulting from genuine hire-purchase transactions. It is the duty of the Assessing Officer to separate the grain from the chaff by examining all the transactions separately with a view to draw a line between genuine hire-purchase transactions and other transactions which are merely in the nature of financing. We find that in the instant case, no such exercise was carried out by the Revenue official for separating the genuine hire-purchase transactions on the anvil of the legal position and the statutory provisions discussed in the foregoing paras. The assessee had initially offered Rs. 4 lakhs and odd under section 2(7) for tax including Rs. 2,282 on account of interest stated to be other than hire-charges. Subsequently, it turned away from its earlier disclosure by filing a revised return claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l had remanded the matter on the basis of the Board's circular No. 760 dated January 13, 1998 (see [1998] 229 ITR (St.) 42), giving guidelines to the assessing authorities for assessment in the cases of hire-purchase companies. It was contended that the Tribunal should not have based its findings on the said circular as it was expected to decide the matter in accordance with law. Learned counsel further contended that, at any rate all the transactions had already been scrutinised by the Assessing Officer and the Commissioner of Interest-tax (Appeals) and, therefore, there was no occasion for directing the Assessing Officer to re-examine the matter. It was also contended that the Tribunal ought to have opined on the findings of the Commissioner of Interest-tax (Appeals) recorded in his order dated February 29, 1996, for the assessment year 1992-93 in respect of hire-purchase transactions of Roor Singh and Pardeep Kumar. Learned counsel argued that the Tribunal had remanded the matter without recording its findings in respect of these two specific transactions which had been specifically analysed by the Commissioner of Interest-tax (Appeals) and, therefore, the Assessing Officer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope for the Assessing Officer to base the fresh order on remand on the basis of the findings of the Commissioner of Interest-tax (Appeals) in respect of those two transactions. The effective findings of the Tribunal, as reproduced earlier, clearly show that the scope of remand is merely to separate genuine hire-purchase transactions from transactions which are merely in the nature of financing. Otherwise, the Tribunal has accepted the assessee's claim that hire-purchase charges earned on hire-purchase transactions cannot be treated as interest under the Act. We also do not find any merit in the contention of counsel for the assessee that the Tribunal has based its decision on Board's Circular No. 760 dated January 13, 1998 (see [1998] 229 ITR (St.) 42). The Tribunal has recorded a categorical finding in favour of the assessee that hire charges of genuine hire-purchase arrangements did not fall within the definition of interest under section 2(7) of the Act. The reference to the said Board's circular is only to show that even the Board accepts this position. We are, therefore, satisfied that these appeals have been filed merely on the basis of an apprehension that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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