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2014 (12) TMI 305 - HC - Income TaxInterest income received from loans – Exclusion of interest income from the computation of chargeable interest and inclusion of net interest only - Whether the Tribunal was right in directing the AO to exclude the interest earned by the assessee company on the deposit made with other concerns while computing the chargeable interest of the assessee u/s.4 of the Interest Tax Act and to include the net interest only received by the assessee company on refinancing, for the purpose of computing the total chargeable interest, despite the clear provisions of Explanation to section 6 of the Interest Tax Act – Held that:- Following the decision in COMMISSIONER OF INCOME TAXGANDHI NAGAR Versus GUJARAT INDUSTRIAL INVESTMENT CORPORATION [2006 (8) TMI 581 - GUJARAT HIGH COURT] - investment in debenture could never be equated with the advancement of loans made in India - loans given by the assessee to ultimate borrowers were part of an overall scheme laid down and controller by IDBI/SIDBI and the assessee has no discretion in respect of any part of the transaction, therefore, such transaction was considered as an integral and the interest accruing to the assessee was considered as arising from the entire transactions - the assessee is liable to interest tax only on the net interest received by it – the amount received by the assessee in the shape of fees cum service charges cannot be equaled with interest as received on loan and advances - interest earned from loan is only includable in the total chargeable interest as contemplated in the definition of interest provided in this Section 2(7) of the Interests Act – thus, the order of the Tribunal is upheld – Decided against revenue.
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