9911796707
TMI Blog2003 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by S. H. KAPADIA J. - The assessee is a banking company. The assessment years with which we are concerned in this reference are 1983-84 to 1986-87 for which the relevant accounting periods ended on December 31, of each previous year. The matter arises under section 5 of the Interest-tax Act, 1974. Facts: The assessee-Bank of Maharashtra filed its return of chargeable interest amounting to Rs. 17.39 crores. It claimed deduction to the extent of rediscounting charges paid to the IDBI and other credit institutions under the rediscounting/refinancing scheme. This was disallowed by the Income-tax Officer, inter alia, on the ground that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that interest and discount paid by the assessee to the IDBI and the RBI (participating financial institutions) form part of the gross receipt of interest received by the assessee from its customer/borrower/drawer of the bills of exchange and, in the circumstances, the Assessing Officer was right in not allowing deduction in respect of interest and discount paid by the assessee-bank to the IDBI and the RBI (participating financial institutions). In this connection, our attention was invited to section 5 of the Interest-tax Act, 1974. It was argued that under section 5 of the Interest-tax Act, the scope of chargeable interest has been defined and the expression "chargeable interest" of any previous year of a credit institution has to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution stood excluded from the expression "chargeable interest" under section 5 of the Interest-tax Act, 1974. This argument of the assessee-bank is correct. The title to the rediscounting charges vests in the participating financial institution which is the IDBI in this case. That 'title does not vest in the assessee-bank. Therefore, the rediscounting charges cannot be taxed as interest accruing or arising to the assessee-bank under section 5 of the Interest-tax Act. A bare reading of section 5 of the Interest-tax Act shows that the chargeable interest of any credit institution shall be the total amount of interest accruing or arising to the credit institution. In this case, the rediscounting charges have not accrued or arisen to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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