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2022 (1) TMI 1165 - HC - Income TaxIncome earned on account of the interest as liable to tax under the Interest Tax Act, 1974 - Reopening of assessment beyond the period of four years as per section 10 of the Interest Tax Act, 1974 - Whether the Appellate Tribunal was right in law in concluding that the interest income as chargeable interest under section 2(7) read with section 2(5B) V-A of the Interest Tax Act, 1974 without considering the Memorandum of the Appellant Company, which does not contain the finance business? - HELD THAT:- We find that the expression “financial company” as defined under section 2(5B) of the Interest Tax Act, 1974, means “a company” carrying on activities as enumerated in sub-clauses (iv) to (v) thereon. Both the appellate authorities have not set out the sub-clause to the definition of “financial company” which covers the appellant company. The said aspect relating to identifying the “taxable person” is an essential criterion for the charge to get attracted. However, the appellate authorities failed to mention the sub-clause to Section 2(5B) of the Interest Tax Act, 1974, under which the appellant would fall. On this score alone, we are inclined to set aside the order of the Tribunal and remand the matter to the Tribunal for fresh consideration. It is apt to refer to the decision of the supreme court in CWT v. Ellis Bridge Gymkhana [1997 (10) TMI 2 - SUPREME COURT] in which, it was held that “the rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section and no one can be taxed by implication”. Thus we set aside the order impugned herein and remand the matter to the Tribunal for fresh consideration. The Tribunal shall examine the facts as regards the activity of the appellant, and set out under which sub clause to the definition of “financial company” under section 2(5B), the appellant company would fall, so as to attract charge under the Interest Tax Act, 1974 and thereafter, pass appropriate orders. Such an exercise shall be completed within a period of twelve (12) weeks from the date of receipt of a copy of this judgment.
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