TMI Blog2014 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... YAHYA, JJ. For The Appellant : Ms. Shuman Sen, DR For The Respondent : Shri Taran Deep Singh, CA ORDER PER U B S BEDI, JUDICIAL MEMBER: This appeal by the department is directed against the order passed by Ld. CIT(A) (LTU), New Delhi dated 31.08.2010 relevant for the assessment year 1992-93 whereby deletion of penalty of ₹ 44,42,839/- u/s 13(1)(c) of the Interest Tax Act has been challenged. This appeal was earlier dismissed by the Bench for want to COD approval on 31.01.2011 whereby, the Tribunal had given liberty to the Revenue that in case it gets approval from COD, then Department can apply to get its appeal revived and the order was recalled at the instance of the revenue in Miscellaneous Application No. 204/Del/2010 dated 20.11.2012. 2. Brief facts indicate that the assessee during the assessment proceedings submitted that chargeability of interest on account of call money with the bank of ₹ 2,13,17,614/- and chargeability of interest on the discounting scheme of ₹ 8,74,28,576/- were not liable to interest tax under the provisions of Interest Tax Act. But, the A.O., while making assessment, held that both the amounts were chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74. Interest as defined in sub-section (7) of Section 2 of the Interest tax Act, 1974 means interest on loans and advances made in India and includes commitment charges on unutilized portion of any credit sanctioned for being availed of in India; and discount on promissory notes and bills of exchange drawn or made in India excluding discount on treasury bills and interest referred to in sub-section (1B) of section 42 of the Reserve Bank of India Act, 1934. As such, the interests received on debentures, bonds, securities and deposits is logically outside the preview of the above mentioned provisions of law as these assets are not loans and advances. However, notwithstanding the above, the Ld. Deputy Commissioner of Interest Tax has added the following amount aggregating to ₹ 49,51,80,631`/- comprising interest received on debentures, bonds, securities and deposits on the basis of a clarification by the Central Board of Direct Taxes (vide instruction no. 1923 dated 14.03.1995) suggesting that interest on debentures, bonds, securities etc. and deposits is also subject to Interest-tax Act. i) Interest of debentures, bonds and securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at these additions made were debatable and required interpretation of the Interest-tax Act, 1974 and other legal provisions. Further, all the particulars regarding interest income were furnished and demand raised by the A.O. was paid. Thus the petitioner company has neither concealed the particulars of its interest nor furnished any inaccurate particulars of such interest in respect of the assessment year 1992-93. Therefore, provisions of section 13 are not applicable. 3.3 The assessee company has filed the details of interest claimed in the return of chargeable interest and the same are supported by the accounting policy of the assessee company. The above mentioned interest has been claimed on the bona-fide belief that it is allowable in computing its chargeable interest it is further submitted that without finding any mistake in the accounts merely disallowance of a claim which was not accepted or was not acceptable to Revenue, that by itself would not attract penalty under section 271(1)(c) of ht I. T. Act, 1961 as held by the Hon'ble Supreme Court in the case of CIT Vs Reliance Products Ltd. (2010) 189 Taxman 322 (S.C.). 3.4 It has further been submitted that no penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized. So, as appears from the above noted provisions, it is amply clear that it is inclusive definition. So, in view of such definition both the items were not offered for taxation in the Interest Tax Act liable for addition which has rightly been made by the A.O. and the assessee has not filed any appeal. Therefore, it attracts penalty u/s 13(1)(c). Therefore, the A.O. is justified in imposing the impugned penalty and Ld. CIT(A) is not factually and legally correct to delete the penalty whose action is illegal and unwarranted and needs to be reversed. It was thus pleaded for reversal of the impugned order. 6. Ld. Counsel for the assessee Shri Tarandeep Singh, while supporting the order of Ld. CIT(A) in this regard has pleaded that the definition of interest which can be considered in this case, is the definition as given under the Interest Tax Act and not under the I. T. Act, 1961 which duly covers this situation and neither nay interest tax could be levied nor penalty is warranted and despite that the assessee has not filed any appeal, the case does not warrant levy of penalty. Moreover, definition of interest as given in the Interest Tax Act contains the word mention of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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