TMI Blog2007 (2) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the hon'ble Income-tax Appellate Tribunal was right in law in allowing deduction of Rs. 3,50,36,152 on account of interest on delayed payment of shares received by the assessee from various collaborators in view of the fact that in section 2 of the Interest-tax Act, for the purpose of charge ability, interest is defined as "interest on loan and advances made in India" and also in view of the fact that the scope of section 5 of the Interest-tax Act is very wide and only specific items excluded are interest on loans and advances given to other institutions and interest on loans given to any other co-operative society, engaged in carrying on of the business of banking?" Briefly the facts are that the assessee, which is carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 3,50,36,152 on delayed payment of shares was received by the assessee with various collaborators, whose projects were promoted by the assessee. The assessee promoted them and the payment on purchase of shares were subject to payments of interest at the prescribed rate. The Assessing Officer hold that the interest received on delayed payment of shares was includible in the value of chargeable interest, consequent addition of Rs. 3,50,36,152 which was reversed by the learned Commissioner of Income-tax (Appeals). Section 2(7) of the Interest-tax Act is very specific and clause (7) speaks about the interest on loans and advances made in India which includes commitment charges on unutilised portion of any credit sanctioned and discount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which is sought to be added in the interest income of the assessee in the present case is not on account of interest income on any loan or advances disbursed by the assessee to the loanees rather the said amount was invested by the assessee as equity participation in various industrial concerns. It is only on account of delayed payment, if any, on account of purchase of those shares by the promoters that interest on the outstanding amount was charged. The amount so charged cannot, in any way, be termed as interest on the loans or advances. The amount invested in equity participation in an industrial concern cannot be characterized as loan or advance in terms of section 2(7) of the Act. The contention of counsel for the Revenue that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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