TMI Blog2006 (1) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... elled/quashed. 2. The learned AO has erred in making an order under s. 17 of the Interest-tax Act, 1974 for the asst. yr. 1998-99 and the learned CIT(A) has erred in maintaining the said order. That both the lower authorities ignored the detailed submissions available on record and as also filed in respective proceedings. 3. The finding recorded by AO and CIT(A) are perverse. 4. That apart, learned AO and CIT(A) failed to take notice of the fact that there was no application of the Interest-tax Act and the validity of the original assessment was disputed in appeal and hence order under s. 17 was void ab initio. 5. The CIT(A) decided the appeal against order under s. 17 without deciding the appeal in quantum matter, on this count als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as heard long back but orders are still awaited. Consequent to above, the notice under s. 17 is also invalid. Without prejudice to the above, the matter was debatable as can be seen from the written submissions made before the AO and the CIT(A). Apart, the order under s. 17 made ignoring the entire submissions and was thus not a speaking order and AO's action amounts to violation of natural justice. On all counts, the quantum order suffers and hence same is bad in law, invalid and on this account the subsequent order under s. 17 is equally invalid in law. 3. The learned counsel for the assessee at the outset submitted that the assessment for the asst. yrs. 1997-98 and 1998-99 against which quantum appeals have been preferred before the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is exhaustive and nothing can further be included in this definition and an extended meaning cannot be given to the term interest. On the specific consideration of the hire-purchase receipts, the, learned counsel relied on the decision of Tribunal, Hyderabad Bench reported as N.K. Leasing Construction (P) Ltd. vs. Dy. CIT (2002) 74 TTJ (Hyd) 261, decision of Tribunal, Lucknow Bench reported as Commercial Motors Finance Ltd. vs. Asstt. CIT (2002) 76 TTJ (Lucknow) 918 and the assessee's agitation before the authorities below that hire-purchase receipts were not interest simpliciter, were in pursuance to CBDT Circular No. 763, dt. 18th Feb., 1998 with retrospective effect from 1st Oct., 1991. He also submitted that Instruction No. 1425, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinate Benches of the Tribunal such as Tara Finvest Ltd. vs. ITO (2003) 81 TTJ (Kol) 631 By Tribunal Calcutta Bench, where the principal business of the assessee was trading in paper, financing was not its principal business. The assessee was held to be not liable for Interest-tax Act on the basis of such findings. Reliance was also placed on the Pune Tribunal Bench decision reported as Dy. CIT vs. Kirloskar Leasing Finance Ltd. (2002) 74 TTJ (Pune) 224 where the assessee-company was held as a leasing company and could not be treated as a loan company as envisaged in s. 2(5B) and more particularly cl. (vi) to establish that the assessee was a financial company. The learned counsel for the assessee, therefore, submitted that the hire charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case by dismissing the assessee's appeal. 5. We have considered the rival contentions and perused the material available on record. The assessee's contention on the merits of the case appears to be on a sound footing insofar as it was the case of the AO by framing assessment under s. 10 r/w s. 8(3) of the Interest-tax Act when this order was sought to be rectified under s. 17 by incorporating finance charges on hire-purchase amounting to Rs. 68,08,654 as against Rs. 19,60,117 considered by him in the original order. The AO considered the assessee's case by clearly establishing that the finance charges on the assets financed are covered in purview of chargeable interest. This was agitated before the learned CIT(A) who did conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the written submissions of the assessee before him. The learned CIT(A), therefore, could not have dismissed the assessee's appeal merely by holding that the original orders which had been rectified by the AO were still pending for adjudication before him inasmuch as the learned CIT(A) could not adjudicate indirectly on the issue which was directly available for adjudication by taking into consideration the appeals filed before him but not rendering itself to the issue become debatable. The learned CIT(A), therefore, is directed to adjudicate first on the appeals preferred by the assessee in the original appeal filed on the order of the AO under s. 10 r/w s. 8(3) to establish that it was a fit case for order by the AO under s. 17. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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