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2005 (11) TMI 167 - AT - Income TaxCharge Of Tax - income from interest from intercorporate deposit - chargeable to tax under Interest-tax Act or not ? - HELD THAT:- We have to strictly abide by the meaning given to it by the Legislature, as in the present case. The new definition of section 2(7) defines interest only to mean interest on loans and advances. No doubt two other categories have also been included, i.e., commitment charges on unutilized portion of any credit sanctioned for being availed of in India, and discount on promissory notes and bills of exchange drawn or made in India. We are not concerned with these two additional categories in the present case. Hence, in our opinion, "interest" in the new section 2(7) only means interest on loans and advances, and we cannot give it an extended meaning as contended by learned counsel for the appellant." In view of the above rules of interpretation of a taxing statute which will be strictly applied, the interest on inter-corporate deposits unless they clearly fall within the meaning of "interest on loans and advances" would not be taxable. We accordingly hold that inter-corporate deposit can neither be a loan nor an advance. We, therefore, direct the Assessing Officer to exclude the interest on inter-corporate deposit from the assessment of the assessee. Consequently, the levy of penalty made would also not stand. They are, accordingly, deleted. In the result, all the appeals of the assessee are allowed.
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