TMI Blog2006 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... l(iii). The learned Departmental Representative-CIT(A) ought to have appreciated that assessee is not a banking company to which the Banking Regulations Act applies." 3. Smt. Sangeeta Gupta, CIT - Departmental Representative supported the order of AO and challenged the order of learned CIT(A) for both the assessment years in question. Learned counsel for the assessee, Shri M.S. Syali, on the other hand, supported the order of the learned CIT(A). He also placed reliance on the order of Tribunal Special Bench in the case of Housing Urban Development Corporation Ltd. vs. Jt. CIT, dt.25th Nov., 2005rendered by the Tribunal, Delhi Bench "E". 4. We have considered the entire material on record. The assessee had made investment in Government securities in the shape of Kisan Vikas Patras (KVP) and debentures, etc. It had not included the income from these securities because the same was not in the nature of interest on loans and advances as per the assessee. The AO was, however, of the view that the investment made by the assessee in Government securities was chargeable to Interest-tax Act. He, therefore, added Rs. 3,59,80,028 for asst. yr. 1996-97 and Rs. 5.43,85,836 for asst. yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder for obtaining the loan therefrom. The loan is clearly lent at the terms stated by the lender. In the case of deposit, however, the depositor goes to the depositee for investing his money primarily with the intention of earning interest. In view of his legal position, it has to be held that interest on deposits representing investment of surplus funds would also not fall under the definition of interest as given in s. 2(7) of the Act and as such would not be liable to interest-tax. The answer to the question under reference in our humble opinion is that investments made by way of short-term deposits and also in the form of securities and bonds cannot be considered as loans and advances and as such interest thereon shall be outside the scope of "interest" defined under s. 2(7) of the Act." 7. Thus, issue stands fully covered in favour of the assessee by the order of the Special Bench. The learned Departmental Representative has not been able to point out any other contrary decision and, therefore, respectfully following the decision of the Special Bench, we uphold the order of learned CIT(A) in both the appeals. Grounds fail. 8. Ground No. 2 in appeal Nos. 38 and 39/De1/2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the circular of the CBDT, as well as the decision of Hon'ble Supreme Court in the case of Sundaram Finance Ltd. vs. State of Kerala (1966) 17 STC 489 (SC) and the decision in the case of Instalment Supply (P) Ltd. vs. Union of India 125 STC 489, in detail, he has observed that the transactions entered into by the assessee with the customers were only hire-purchase transactions and it could not be held that the transactions were financing transactions. He, therefore, deleted the addition of Rs. 43,54,00,295 for asst. yr. 1996-97 and Rs. 59,90,22,359 for asst. yr. 1997-98 by observing as under: "6.13. I have considered the aforesaid facts of the case and held that the AO is not justified in bringing the income from hire-purchase transactions within the purview of interest-tax. The income received from such hire-purchase transaction cannot be termed as interest income and cannot be subject to interest-tax because all the three steps brought out by the CBDT's Circular No. 760, dt.13th Jan., 1998are examined in this case and tests laid down by the Hon'ble Supreme Court in the case of Sundaram Finance vs. State ofKeralaare also applied. It is found that the appellant-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions and features of financing transactions and also considered cl. 4 and cls. 11, 14 of the agreement. He has also considered the basic features stated in the case of Sundaram Finance and Instalment Supply (P) Ltd. and after testing the facts on the test of the preposition laid down in these two decisions and also after taking into consideration the relevant Board circular he found that the assessee was the owner of the vehicles. Thus, the decision of Agra Bench of Tribunal reported in (2004) 83 TTJ (Agr) 809 : (2004) 88 ITD 620 (Agr) is totally distinguishable because in that case the assessee was not found to be the owner of the vehicles but the hirers were found to be the owners of the vehicles. The decision of Lucknow Bench of the Tribunal in the case of Commercial Motors Finance Ltd. is fully applicable in the present case because in that case also the assessee was held to be the owner of the vehicles on examination of the relevant clauses of the agreement. Thus, on facts the present case is fully covered by the decision of Tribunal,Lucknow. 16. In view of the above, we uphold the order of learned CIT(A) and reject the ground taken by the Revenue in its appeals fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in those appeals for asst. yrs. 1996-97 and 1997-98 has been upheld by us. Hence, following the said decision of ours, we delete the addition made by the learned CIT(A) by holding that interest earned on debentures and Government securities is not chargeable to interest-tax. In the consequence, this ground is allowed in favour of assessee. 21. Ground NO.3: This ground runs as under: "That on the facts and circumstances of the case and in law, the learned CIT(A)XV has erred in holding that: (i) The sum of Rs. 76,46,923 being interest received by the appellant on delayed payments made by customers of lease rentals, hire-purchase instalments etc., is chargeable to interest-tax. (ii) Interest received by the appellant on overdue instalments arises out of a loan or advance given by the appellant." 22. The very same issue has been dealt by us in assessee's own case for asst. yrs. 1996-97 and 1997-98 rendered in Interest-tax Appeal Nos. 36 and 37/Del/2001 wherein vide our order of even date we have held that the learned CIT(A) was not justified in confirming the order of AO, in charging interest-tax in respect of interest received on delayed payment of lease rent, hire-purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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