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2011 (7) TMI 507 - HC - Income TaxInterest tax - Whether in the facts and circumstances of the case, the Tribunal was right in holding that interest tax cannot be charged on interest received on advances to dealers and suppliers - the assessee's case does not fall for consideration under sub-clause (iv) of Section 2(5B) - The assessee is a credit institution - As a finance company engaged in hire purchase and leasing transaction, the assessee also does not deny that its activities in respect of financing, falls for consideration under sub clause (iv) - The Assessing Officer has assessed the transactions relating to hire purchase financing - the assessee's case does not fall for consideration under sub-clause (iv) of Section 2(5B) - The assessee is a credit institution - As a finance company engaged in hire purchase and leasing transaction, the assessee also does not deny that its activities in respect of financing, falls for consideration under sub clause (iv) - However, as rightly pointed out by the assessee, when the payment of money as advance was towards the purchase of machinery, there exists a distinct feature from all those transactions of financing on hire purchase and leasing that an exception has to be made in respect of the amount advanced by the assessee for the purpose of purchase of machinery - On the delay in delivery, the manufacturer had paid interest - As already pointed out, going by the fact - a fact which is not disputed by the Revenue, that the amount given by the assessee was towards the purchase of machinery as advance, held that the case of the assessee does not fall for consideration under sub-clause (iv) of Section 5(B) - Therefore no hesitation in holding that the Interest Tax Act does not stand attracted to the facts of the case. On the admitted facts, the assessee had financed for the purpose of purchase of machinery - Decided against the assessee.
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