TMI Blog2018 (10) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. It is obvious that if discounted bills of exchange were also to be treated as loans and advances made in India there would be no need to extend the definition of “interest” to include discount on bills of exchange. Indeed, this matter is no longer res integra. - Decided in favour of the assessee and against the Revenue - Tax Case (Appeal) No.1446 of 2008 - - - Dated:- 14-9-2018 - Mr. T. S. Sivagnanam And Mrs. V. Bhavani Subbaroyan JJ. For the Appellant : Mr.R.Vijayaraghavan For the Respondent : Mrs.R.Hemalatha JUDGMENT T. S. SIVAGNANAM, J. This appeal by the assessee is directed against the order passed by the Income Tax Appellate Tribunal, Chennai 'A' Bench in I.T.A.No.28/2002 dated 14.10.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (b) discount on promissory notes and bills of exchange drawn or made in India, but does not include- (i) interest referred to in sub-section (1B) of Section 42 of the Reserve Bank of India Act, 1934 (2 of 1934); (ii) discount on treasury bills; 10.In terms of the definition of interest as defined in Section 2(7) of the Interest Tax Act, it means interest on loans and advances made in India. It includes two other categories and excludes two other categories. But, in these appeals, we are not constrained about such inclusion or exclusion, as it is the case of the Revenue that the charges collected by the assessee would fall within the inclusive definition of interest under Section 2(7) of the Interest Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable under the Interest-tax Act and the character of an overdue bill is not synonymous with loans and advances and therefore, the interest on overdue bills is to be excluded from chargeable interest under the Interest-tax act. 4. Applying the above ratio to the facts of the case, we hold that the Interest-tax Act is attracted only in respect of interest on loans and advances and the additional discount charges which is an amount given as a premium, would not attract the provisions of the Interesttax act. The Tribunal is therefore correct in excluding additional discount charges from the chargeable interest under the Interest-tax Act. 13.In the case of Commissioner of Income-tax vs. Bank of Rajasthan Ltd. [2010] 323 ITR 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Karnataka in the case of State Bank of Mysore (supra) is directly in conflict with the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax vs. Sahara India Savings Investment Corpn. Ltd. [2009] 17 SCC 43 and therefore, held that a contrary view cannot be countenanced. 17.It was further pointed out that loans and advances has been held to be different from discounts and legislature has kept in mind the difference between the two and it is clear that the right to charge for overdue interest by the assessee banks did not arise on account of any delay in repayment of any loan or advance made by the said banks and this right arose on account of default in payment of amounts due under a discounted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest out of a loan or advance. And thirdly, any moneys borrowed must be contrasted with loan or advances . The former expression would certainly bring within its ken moneys borrowed by means other than by way of loans or advances. We therefore conclude that the Interest Tax act, unlike the Income Tax Act, has focused only on a very narrow taxable event which does not include within its ken interest payable on default in payment of amounts due under a discounted bill of exchange. 18.In the light of the above referred decisions, the order passed by the Tribunal does not lay down correct legal position and accordingly, the same calls for interference. 19.In the result, the appeals filed by the assessee are allowed, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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