TMI Blog2010 (10) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by the Commissioner of Income tax who had exercised the power under Section 19(1) of the Interest Tax Act, 1974 as the acceptance of Nil chargeable interest submitted by the assessee was prejudicial to the interest of the revenue? 3. Whether the Tribunal was correct in allowing the appeal I.T.A. No. 1/Bang/2005 when I.T.A. No. 1111/06 challenging the order of Tribunal passed in I.T.A. No. 4/Bang/2003 was pending? In ITA 579/2007. The following substantial question of law arises for our consideration: 1. Whether the assessee is a loan company as defined under Section 2(5B)(iv) of the Interest Tax Act? 2. Whether the Tribunal was correct in reversing the order passed by the Commissioner of Income Tax who had exercised the power under Section 19(1) of the Interest Tax Act, 1974 as the acceptance of Nil chargeable interest submitted by the assessee was prejudicial to the interest of the revenue? 3. Whether the Tribunal was correct in allowing the appeal I.T.A. No. 2/Bang/2005 when ITA No. 1112/06 challenging the order of Tribunal passed in I.T.A. 5/Bang/2003 was pending? The above 4 appeals pertain to assessment years 1995-96 and 1996-97 in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a financial company, it directed the assessing authority to inquire whether the advance made by the respondent-assessee was inter-corporate deposit or not. 5. The learned senior counsel Mr. Indra Kumar representing the revenue, from the records informs the Court that there was third assessment year pertaining to the above assessment years in favour of the revenue. 6. Aggrieved by the said order of the Appellate Authority, the respondent-assessee approached the Tribunal and the Tribunal in view of the order dt. 29.03.2006 opined that there remained nothing for them to proceed with the matter in view of already holding the opinion in favour of the Tribunal, the revenue is again before us in the appeals No. ITA. 578/2007 and ITA 579/2007. 7. In all the 4 appeals, the real question of controversy is; whether the respondent-assessee is a credit institution attracting sub-section 4 of section 2(5A) of the Act and whether it falls under the definition of financial company under section 2(5B) of the Act? 8. According to the learned counsel for the revenue, section 4 and 5 of the Act are relevant to understand and decide the controversy in the above said appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Apex Corporation. Therefore, it would amount to double taxation which is not permissible in law. Hence, he requested for dismissal of the Appeal. 14. Section 2?(5A) of the Act defines credit institution and classifies 4 types of credit institution as under:- (5A) Credit Institution means.- (i) a banking company to which the Banking regulation Act, 1949 ( 10 of 1949) applies (including any bank or banking institution referred to tin section 51 of that Act) (ii) a public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956); (iii) a State Financial Corporation established under section 3 of section 3A or an institution notified under section 46 of the State Financial Corporation Act, 1951 (63 of 1951); and (iv) any other financial company; (i) to (iii) are not applicable to the respondent-institution and it has to come under the (iv) classification, namely, any other financial company . 15. Apparently, the respondent-assessee is accompany. While giving the details of the business as money lending apart from hire purchase list dealing in shares and business of vegetable oil etc. Therefore, the contention of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessment year commencing on and from the 1 st day of April, 1992, interest tax in respect of its chargeable interest of the previous year at the rate of three percent of such chargeable interest;] [Provided that the rate at which interest tax shall be charged in respect of any chargeable interest accruing or arising after the 31 st day of March, 1997 shall be two percent of such chargeable interest] Section 5 of the Act reads as under.] [Scope of chargeable interest. 5 Subject to the provisions of this Act, the chargeable interest of any previous year of a credit institution shall be the total amount of interest (other than interest on loans and advances made to other credit institutions [or to any co-operative society engaged in carrying on the business of banking], accruing or arising to the credit institution in that previous year;] Provided that any interest in relation to categories of bad or doubtful debts referred to in section 41D of the Income-tax Act shall be deemed to accure or arise to the credit institution in the previous year in which it is credited by the credit institution to its profit and loss account for that year or, as the case may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly well known principal that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. relied upon by Shri Narasimhamurthy, it was observed: while interpreting an exemption clause liberal interpretation should be imparted to the language thereof provided no violence is done to the language employed. It must, however be borne in mind that absurd results of construction should be avoided. The choice between a strict and a liberal construction arise only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to nay interpretative process arises only where the meaning is not manifest on the plan words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this Court in Union of India v. Wood Paper Ltd. [1990 (47) ELT. 500 (SC) = 1990 (4) SCC 256]; Truly speaking liberal and strict construction of an exemption provisions are to be invoked at different stages of interpreting it. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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