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2017 (12) TMI 1422 - HC - Income TaxChargeability of “Finance charges” as, interest received from hire purchase transaction, and other interest to attract tax on interest under the Interest Tax Act, 1974 - Held that:- Admittedly, the finance charges involved in the instant case are from hire purchase of vehicles. The position has now been settled by a precedent of this Court involving the same assessee, Commissioner of Income Tax v. K.S.F.E. Ltd. (2008 (3) TMI 676 - KERALA HIGH COURT) as held hire purchase companies are squarely covered by definition of “credit institutions” under the Act and are liable to pay tax on charge of interest on loans and advances. It is immaterial whether a loan or advance is called hire-purchase agreement or not. On the other hand, what is to be considered is whether the transaction involved is really a loan or advance and if the transaction is found so, then the interest earned on the same is taxable under the Interest-tax Act. - Decided against assessee.
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