9911796707
TMI Blog2014 (8) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... erest on the demand bills is not chargeable to tax under the Interest Tax Act, 1974? The respondent is a Nationalised Bank and as part of its transactions, it undertakes several activities including lending of loans and purchasing of bills of exchange. The parliament enacted the Interest Tax Act, 1974 (for short the Act) providing for levy of tax on interest on loans and advances. The respondent submitted returns as required under the Income Tax Act, for the Assessment years 1976-1977 to 1979-80, 1981-82 to 1986-87, 1992-93 and 1993-94, before the concerned I.T.O. Several claims of deductions or recoveries were made under different heads. One such recovery was the exemption from payment of tax for the amount representing the overdue inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onflict of view expressed by the different High Courts, has allowed the appeals, preferred by the respondent. Sri Dwarakanath, learned counsel for the respondent, on the other hand, submits that the definition of interest, under Section 2(7) of the Act is restrictive in nature, and that it covers only interest on loans and advances and not the interest liveable on other transactions or occasions or purposes. He submits that the subject matter of the dispute before the various High Courts was straight away the loan lent by the Bank and the amount of interest levied, and that the High Courts treated the transactions under Section 32 of the Negotiable Instrument Act, as covered by the provisions of the Interest Act. The controversy in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, that are made by the scheduled banks, and not others, that are covered by the Act. This is evident from Section 4 which reads as under: 4.(1) Subject to the provisions of this Act, there shall be charged on every scheduled bank for every assessment year commencing on or after the 1st day of April, 1975, a tax in this Act referred to as interest-tax in respect of its chargeable interest of the previous year at the rate of seven per cent of such chargeable interest: (Other part of the Section, omitted, as not necessary for this case) In other words the loans and advances emanating from non schedule banks or private individuals are not covered by the Interest Act. In case the respondent lent loans or made advances to its customers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogether, comes into existence. When the Act covers, just the interest on loans and advances, it is difficult to bring under its fold, the transaction of purchase of Bills of Exchange. Had the Parliament been of the view that a transaction purchase of bills of exchange is on par with the transactions of loans and advances and wanted to levy tax on every amount that is recovered in the form of interest, penal or otherwise, it would have certainly included such transactions in the definition clause or in the other charging sections. That is not having been done, the assessing authority cannot be permitted to widen the scope of the Act. We are in agreement with the view taken by the Tribunal in its order dated 22.10.1998, and accordingly, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
