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2019 (3) TMI 60 - HC - Income TaxLiability to interest tax on interest on debentures - Interest Tax Act, 1974 - HELD THAT:- The issue stands covered in favour of the assessee and against the Revenue by a decision of Commissioner of Income Tax v. Gujarat Industrial Investment Corporation [2016 (10) TMI 54 - SUPREME COURT] found on a reading of the definition of 'interest' as contained in Section 2(7) of the Interest Tax Act, 1974 that the Act would have no application to interest on debentures. We hence answer the said question in favour of the assessee and against the Revenue. Liability to pay interest tax on the interest received on a loan made to a broker - assessee being a company engaged in the purchase and sale of securities - HELD THAT:- There being no trading activity between the assessee and the broker, it cannot be said to be a trading advance. The advance was made for making investments and after such investments were made what was retained with the broker was levied with interest by the assessee thus giving it the character of a loan. The assessee's intention at the time of advance is not at all relevant, since the character of the amounts retained with the share broker underwent a change, insofar as the levy made for interest. It is also clear that the amount remained with the broker for one year and hence the receipt of ₹ 1,80,000/- as interest on a loan of ₹ 10 lakhs @ 18% p.a. - Decided in favour of the Revenue and against the assessee.
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