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2014 (9) TMI 702 - HC - Income TaxInterest on debentures - Whether the Tribunal is right in holding that interest on debentures will not form part of chargeable interest under the Interest Tax Act – Held that:- Following the decision in Commissioner of Income-Tax V. Sahara India Savings and Investment Corporation Ltd. [2009 (11) TMI 25 - SUPREME COURT OF INDIA] - the interest-tax is meant to be levied only on interest accruing on loans and advances but the Legislature has extended the meaning of the word "interest" to two other items, namely, commitment charges and discount on promissory notes and bills of exchange - interest on loans and advances will not cover u/s 2(7) interest on bonds and debentures bought by an assessee as and by way of "investment" - Even the exclusionary part of section 2(7) excludes only discount on treasury bills as well as interest under section 42(1B) of the Reserve Bank of India Act, 1934 – Decided against revenue. Addition of notional interest - Whether the Tribunal is right in holding that addition of notional interest are to be reckoned with for the purpose of calculating the chargeable interest under the Interest Tax Act – Held that:- CIT(A) has given a clear finding that notional interest can never be considered as part of chargeable interest - the notional interest brought to tax under Interest Tax Act has never been considered as part of interest accrued or arisen in the books of account, namely, profit and loss account and therefore, the question of adding notional interest was declined - The Tribunal has not gone into the issue at all – CIT(A) was correct in deleting the addition of notional interest - Revenue has not shown any provision whereby, notional interest can be included for the purpose of tax – Decided against revenue.
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