9911796707
TMI Blog2008 (8) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... in all these four appeals is common, being as to whether the interest/penal interest, charged by the Bank, on delayed payment of installments, in recurring deposit account, by the depositor, can be subjected to levy of tax, under the provisions of Interest Tax Act, 1974? and therefore, all these appeals are being decided by this common order. 2. The facts, being not in dispute, need not detain us, in as much as, the controversy, in all the appeals, is only about various amounts of interest, recovered by the assessee, from customers/ depositors, under the nomenclature of penal interest, for late deposit of requisite installments, on or before the stipulated dates, on all the recurring savings deposit accounts. The assessing officer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, two judgments relied upon, are distinguishable on facts, in as much as, in Canara Bank's case, matter involved was, about the Industrial Development Bank of India's Bills Re-discounting Scheme. In that case, whole transaction was based upon pre-existing agreement between parties, including IDBI and the assessee Bank, was only found to be medium, or a conduit pipe, for disbursement of development fund, for implementation of Scheme. Rediscounting interest, paid on bills to RBI, or IDBI, did not accrue, or arise to the assessee bank, and thus, was not found to be forming part of chargeable interest, under the Act. Likewise, in State Bank of Mysore's case also, the matter was regarding discounting of bills, which was found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, made in India. 7. Learned counsel for the appellant submits, that delayed payment of installments of R.D. Account, should be taken to be a "loan or advance" and, therefore, the interest earned thereon is exigible to tax. We are afraid, this interpretation cannot be accepted, in as much as, even taking the case on the highest, the liability of the depositor, to pay the installments, on or before specified date, can at best, be said to be a commitment on his part, and the penal interest is charged for not keeping up the commitment, but then, on any parameters, it cannot be said, that the amount of installments was required to be deposited by the depositor in the recurring deposit amount was an advance or loan by the bank t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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