TMI Blog2002 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... em does not the chargeable interest deserve to be computed on cash method - - - - - Dated:- 12-11-2002 - Judge(s) : MRS. RUMA PAL. and B. N. SRIKRISHNA. JUDGMENT The subject matter of the dispute in this appeal relates to the interpretation of section 5 of the Interest-tax Act, 1974 ("the Act"), which reads thus: "Subject to the provisions of this Act, the chargeable interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation of section 145 of the Income-tax Act, 1961, with effect from October 1, 1991, in section 21 of the Interest-tax Act, 1974, and the overriding effect of section 21 over section 5, by which the interest-tax has to be levied only on the interest income computed, based on the method of accounting regularly employed by the assessee, the Appellate Tribunal was correct in law in concluding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest-tax Act?" The High Court decided the first question only against the assessee and in favour of the Revenue. The second question was not considered given the High Court's decision on the first question. The High Court, in the impugned judgment has held that the "chargeable interest", in terms of section 5 of the Act was the total amount of interest accruing in the relevant previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Section 145 of the Income-tax Act permits income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" to be computed in accordance with either the cash or mercantile system of accounting, as may be regularly employed by the assessee. The assessee, in the case before us, has followed the cash system of accounting in respect of the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and non-banking financial companies in the corporate sector on loans and advances made in India." That the Finance Minister's speech can be relied upon to throw light on the object and purpose of the particular provisions introduced by the Finance Bill has been recognised by this court in K.P. Varghese v. ITO [1981] 131 ITR 597, 609. In view of the above the appeal is allowed and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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