Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 328 - MADRAS HIGH COURTInterest tax charged on interest received on trade advances - whether advance could not be treated as loan to attract the provisions of the Interest-tax Act? - Held that:- 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). 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, we hold that the case of the assessee does not fall for consideration under sub-clause (iv) of Section 5(B). Going by the definition therein, we hold that the trade advance given does not fall under the phrase loan or advance or otherwise so as to cover the nature of transactions herein. - Decided in favour of the assessee.
|