TMI Blog2011 (1) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... ng them - Hence, direct the High Court to decide the matter in accordance with law. - 556 TO 559 OF 2011 - - - Dated:- 14-1-2011 - S. H. KAPADIA, CJ. I., K.S. PANICKER RADHAKRISHNAN AND SWATANTER KUMAR, JJ. O.S. Bajpai, V.N. Jha and V.N. Raghupathy for the Appellant. D.K. Singh, Manoj Kaushik and B.V. Balaram Das for the Respondent. JUDGMENT 1. By consent, the matter is taken up for hearing. 2. Despite repeated adjournments, counter-affidavit has not been filed. 3. Leave granted. 4. In the present case, the assessee is a non-banking financial company registered with R.B.I. It is engaged in the business of hire-purchase and leasing. In the return of income under the Income-tax Act, 1961 it showed the following compon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 Act. The total interest chargeable, according to the Assessing Officer, was Rs. 75,43,23,158. One of the issues which arose for determination was whether the transactions undertaken by the assessee were in the nature of hire-purchase and not in the nature of financing transactions. According to the assessee, there is a dichotomy between financing transactions and hire-purchase transactions. According to the assessee, its principal business was of leasing. For the aforestated reasons, the assessee contended that it was not covered by the definition of "financial company" under section 2(5B) of the 1974 Act. On examination of the facts of the case and looking into all the parameters, including the parameter of the principal business, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the lease transactions undertaken by the assessee and the lease charges received by it did not fall within the ambit of section 2(7) of the 1974 Act because the Department had accepted the case of the assessee that it remained the owner of the leased assets for all times to come and, therefore, it was not open for the Department to say that charges received for leasing the vehicles are financial charges exigible to the Interest-tax Act, 1974. Consequently, the Commissioner of Income-tax (Appeals) came to the conclusion that the Assessing Officer had erred in bringing to tax lease rental charges of Rs. 40,86,85,186 as chargeable interest under the 1974 Act. 6. Aggrieved by the decision of the Commissioner of Income-tax (Appeals) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Delhi High Court under section 260A of the Income-tax Act, 1961. The appeal was allowed by the High Court. It was held by the High Court that the Tribunal had erred in holding that for deciding the principal business of a taxable entity under the 1974 Act only the receipt from business is the criteria and the other parameters such as turnover, capital employed, the head count of persons employed, etc. were not relevant. Accordingly, the Tribunal's decision stood set aside. The High Court also remitted the case to the Assessing Officer saying that it was not clear from the material produced before the court as to whether the lease agreements entered into by the assessee were financial leases or operational leases or both. Aggrieved by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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