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2023 (1) TMI 285 - SC - Income TaxLiability to pay tax under the Interest-Tax Act, 1974 - interest component included in the hire-purchase instalments paid under the hire-purchase agreement - Assessees are non-banking finance and leasing companies registered with the Reserve Bank of India -Some of the appellants – assessees have been reclassified as hire-purchase finance companies. It is not disputed that the appellants – assessees are credit institutions within the meaning of Section 2(5-A) of the Act - contention of the appellants – assessees is that under a hire-purchase agreement, they hire out a vehicle to the customer and receive hire-purchase instalments, and not interest on loans and advances - distinguish between financial lease and operating lease - HELD THAT:- We are dealing with and interpreting Section 2(7) of the Act, which has been interpreted in two decisions, that is, in the case of Sahara India Savings and Investment Corporation Limited [2009 (11) TMI 25 - SUPREME COURT] and State Bank of Patiala Through General Manager [2015 (11) TMI 869 - SUPREME COURT] which have given a very limited and restricted meaning to Section 2(7) of the Act as interest directly arising “on” loans and advances, and not any other interest, be it interest earned on investment or interest payable on delayed payment of the discounted bill of exchange. Findings of fact generally recorded by the ITAT are treated as conclusive. The High Court can interfere with the findings of fact while deciding a substantial question of law when the findings are not supported by the material on record, so as to be treated as perverse. See Karnataka Board of Wakf v. Anjuman-E-Ismail Madris-Un-Niswan, [1999 (8) TMI 1018 - SUPREME COURT] and C. Doddanarayana Reddy (Dead) By Legal Representatives and Others v. C. Jayarama Reddy (Dead) By Legal Representatives and Others [2020 (2) TMI 1676 - SUPREME COURT] For this, however, the High Court must frame a separate substantial question of law and only then interfere with the findings of fact by the ITAT, while applying the strict parameters. In the present case, the High Court did not frame a specific substantial question of law and thus, the interference with the findings of fact is unwarranted. This is not to say that the tax authorities are not entitled to examine the surrounding facts and circumstances to ascertain the true character and nature of the transaction, regardless of the nomenclature given by the parties. Given the aforesaid legal position, we may have even remanded the matter to the assessing officer for fresh adjudication and to re-examine all the transactions in light of the aforesaid ratio and reasoning, keeping in mind the dictum laid in Sahara India Savings and Investment Corporation Limited (supra) and State Bank of Patiala Through General Manager (supra) to rule out cases where camouflage or subterfuge has been adopted to avoid payment of interest tax. This would have entailed not only looking at the documents but also several other factors, which would have meant getting information and ascertainment of facts in detail from the assessee and the hirer. However, at this distinct point of time, we do not think that it would be appropriate to pass an order of remand. It is to be also noted that the Act has ceased to operate with effect from 31st March 2000. We allow the present appeals and set aside the impugned judgments. The additions made by the assessing officer are set aside and the orders passed by the ITAT deleting the additions in the case of the appellant – M/s. Muthoot Leasing and Finance Limited and other cases are upheld.
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