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2016 (8) TMI 228 - HC - Income TaxInterest payable to NHB on financing scheme - amount on this account considered chargeable under the Interest Tax Act by the Assessing Officer was directed to be deleted by the CIT(A) confirmed by ITAT - Held that:- Tribunal is justified in dismissing the claim of the revenue inasmuch as whatever is collected by the Bank has to be passed over to the NHB and it is in the nature of repayment with regard to the money advanced by NHB alone and therefore in such a situation the concerned amount cannot have the legal requirement of ‘Chargeable Interest’ as it cannot be said that on the said amount interest has accrued. Similarly, so far as EMI is concerned, the Tribunal is right in holding that after selling and transferring the loan portfolis the assessee has no right over the same but by virtue of agreement it is entitled to receive agreed percentage of interest component of each EMI towards the service of collection and rendering them to HDFC. Therefore the amount received is not in nature of interest but in the nature of service charges and therefore the same cannot be subjected to interest tax. Therefore we answer both the questions in favour of assessee and against the revenue. Amount being processing fees, reimbursement charges and damage charges and interest portion of lease rental deleted from the chargeable interest - Held that:- The expenses such as processing fees, damage charges, verification charges, reimbursement charges and lease rent etc are expenses and they cannot be added to the income. The character of the receipts above is not synonymous to interest on loans and advances. Thus, we are of the view that the Tribunal has rightly answered the questions in favour of assessee and against the revenue.
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