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TMI Blog2012 (11) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs.75,530/-. The Assessing Officer sought to initiate reassessment proceedings under Section 10 of the Interest Tax Act, stating that he had reason to believe that the assessee had not brought to tax amounts under the enactment. The assessee objected through representation and letter dated 10.03.2006. The Assessing Officer confirmed the order, directing that the amount of Rs. 3,10,82,350/- was in fact interest and not hire-purchase and, therefore, taxable under Section 2(7) of the Interest Tax Act. The assessee's appeal was considered by the Commissioner, who took into account the assessment proceedings which culminated in the order of ITAT for the previous years, wherein it was held that the assessment for the present year, by bringing to tax amount of Rs.3,09,86,822/- was justified under the circumstances. 3. The appellate commissioner noticed that the Assessing Officer had recorded the following reasons for issuance of notice under Section 10: "In the appellant's case, the Hon'ble ITAT in Interest Tax appeal numbers 15, 16, 17, 18 and 19/Agra/2002 and Interest Tax Appeal No. 01/Agra/2002 for the A. Yrs. 1994-95, 1995-96, 1996-97, 1997-98, 1998-99 and 1999-2000 has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion as to whether the real nature of the transaction was one of hire-purchase or interest received on loan was concerned, the appellate commissioner extensively relied upon the previous decision of the Tribunal in the case of the appellant for the assessment year 1995-99-2000 in Appeal Nos. 115-19/Agra/2002 dated 14.08.2003. For these reasons, the appeal of the assessee was dismissed. The ITAT, in the impugned order, affirmed the CIT(A)'s decision. 6. During the appeal, learned counsel for the appellant argued that the appellate commissioner did not deal with the question of reassessment in its entire and proper perspective. It was urged that when all facts had been disclosed, and the Assessing Officer had opportunity to deal with the matter, no finding was returned, holding that in substance, the transactions yielded interest and were not in the nature of hire-purchase. It was urged that the appellate commissioner should have been more careful in considering the correctness of the reassessment proceedings as what was before him and what had been taken into account could not again have been revisited in the subsequent reassessment proceedings under Section 10. 7. It was urged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation; for the subsequent assessment year, it was held that the lease vehicles were not available, as lease arrangement was, in fact, amounted to financing of vehicles and therefore, the assessee was disentitled to depreciation. The CIT(A) also relied upon Raymond Woollen Mills Ltd. (supra) in support of the reopening of the assessment. 11. Having considered all these, which is a matter of record, this Court finds no infirmity in the reasoning of the Tribunal as well as that of the lower authorities. The reassessment under Section 10 of the Interest Act was in order and resorted to in accordance with law. The first question is, therefore, answered against the assessee. 12. On the second question, i.e. nature of the transaction, the CIT(A) as well as the Tribunal relied upon the previous ruling of the Tribunal in the assessee's case which noted the following features: "16. In view of the above background, we have to see the intention of the assessee company and so called hire purchaser with reference to the test laid down in circular No. 760 dated 13th Jan, 1998 and we noted that- (i) The sale invoices in all the cases have been issued by the dealers of the vehicle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hirer. The delivery of the possession of the vehicle is not given by the assessee-company, but it has been delivered directly by the dealer of the vehicle to the so-called hirers. The possession of the vehicles has already been passed by the so-called hirer without payment of any instalment. Therefore, as per definition of hire purchase agreement, discussed above, it can only be said that is only an act of advancing money or loan and not a transaction of hire purchase. This issue also came for the consideration of the Hon'ble Supreme Court of India through in different context in the case of K.L. Johar & Co. v. Deputy Commissioner Tax Officer Coimbatore 1965 AIR SC 1082 in that case, the Hon'ble Supreme Court of India has made the following observations:- "Hire-Purchase agreements are not conditional sales. A hire-purchase agreement has two elements (1) Element of bailment, and (2) element of sale, in the sense that it contemplates as eventual sale. The element of sale fructifies when an option is exercised by the intending purchaser after fulfilling the terms of the agreement. The taxable event under the Act is to sale of goods and until that taxable event takes place there ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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