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TMI Blog2018 (10) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... g to smallness of the amount, we hold the same to be susceptible to the interest tax. Consequently, the assessee gets relief on account interest income derived from investment in debentures and interest income received from other credit institution aggregating to ₹ 24,19,178/- and other additions are not interfered with. - Int .T.A. Nos. 01 TO 03/Ahd/2017 - - - Dated:- 8-10-2018 - SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER For The Appellant : Shri Bandish Soparkar , A.R. For The Respondent : Shri Mudi t Nagpal , Sr . D.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeals arise from the respect ive orders of the Commissioner of Income Tax (Appeals) [C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to ₹ 34,24,077/- assessed under s.8(3) r.w.s. 10 of the Interest Tax Act, 1974 [the Act]. 5. When the matter was cal led for hearing, the learned AR submit ted that the assessee company has derived interest income predominantly from applicat ion of i ts own funds. The details of interest income from various sources are stated to be as under: Interest from Tata Chemicals Ltd. ₹ 9,83,219 Interest from Gujarat Leas. Fin. Ltd. ₹ 4,19,178 Interest from Alpa Mktg. Enterprise ₹ 21,680 Interest from Vimpson Inv.Ltd. Rs.20,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed AR next referred to the financial statement of the assessee for F.Y. 1994-95 relevant to AY 1995-96 in question and further adverted our attent ion to the schedule of the Investments therein and submit ted that interest income was flowed from investment in debentures of Vimpson Inv. Ltd. In this context, the learned AR referred to the decision of the Hon ble Supreme Court in the case of the CIT vs. Sahara India Savings Inv. Corporation Ltd. [2010] 321 ITR 371 (SC) for the proposition that for the purpose of chargeable of interest under the Interest Tax Act, interest on loans and advances under s.2(7) of the Act will not cover interest on bonds and debentures bought by an assessee as and by way of an investment . The learned AR accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CIT(A). 7. We have careful ly considered the rival submissions. The chargeabili ty of interest tax on interest derived from various sources is in controversy. As pointed out on behalf of the assessee, chargeable interest computed by the AO at ₹ 34.24 Lakhs includes ₹ 20 Lakhs towards interest from investment in debentures which is not susceptible to interest tax in view of the decision of the Hon ble Supreme Court in the case of Sahara India (supra). Thus, additions of ₹ 20 Lakhs is not sustainable in law. Similarly, interest received from another credit institution amounting to ₹ 4.19 Lakhs is also not susceptible to interest tax in view of the exclusion provided under s.5 of the Act for which the CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98 comprises of (i) interest received from Nirman Corporation ₹ 34,28,806/-, (ii) interest from Ashwin C sons ₹ 1,216/- and (iii) interest from Vimpsons ₹ 6,61,876/- agreegating to ₹ 40,91,898/-. The interest from investment in debentures from Vimpsons Investment is eligible for relief from the chargeability of interest tax in parity wi th view taken in other appeals (supra). The interest received from Nirman Corporation is stated to be inter-corporate deposit placed with the group company out of its own fund which is not shown to be in the nature of loans and advances in the financial statements. Therefore, the assessee deserves relief from chargeability of interest in respect of intercorporate deposit in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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