TMI Blog2018 (12) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... nce but an investment? - Held that:- Revenue would submit that the Tribunal, in its impugned order, followed the decision of the Allahabad High Court in the case of CIT Vs. Sahara India Savings and Investment Corporation Ltd. [2003 (9) TMI 74 - ALLAHABAD HIGH COURT]. The said decision has been upheld by Hon'ble Supreme Court [2009 (11) TMI 25 - SUPREME COURT OF INDIA] in the decision and the substantial question of law has been answered in favour of the assessee as held 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 Interest-tax act. The Tribunal is therefore correct in excluding additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Sahara India Savings and Investment Corporation Ltd., [reported in (2003) 264 ITR 646]. The said decision has been upheld by Hon'ble Supreme Court in the decision reported in ( 2010) 186 Taxman 19 and the substantial question of law has been answered in favour of the assessee. The said decision in the case of Sahara India Savings and Investment Corporation Ltd., was taken note of, in the case of M/s.Palghat Permanent Fund Ltd., Vs. ACIT in TCA Nos. 1148 1149 of 2008 dated 10.09.2018, the operative portion of which is as follows: 9.The issue, which falls for consideration, is whether the penal interest collected by the assessee would fall within the ambit of the Interest Tax Act and more particularly, within the definition of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lamandalam Investment Finance Co. Ltd. reported in (2008) 296 ITR 0601 wherein, the substantial question of law, which was framed for consideration, was whether the Tribunal was right in excluding additional discount charges from the chargeable interest under the Interest Tax Act. The Division Bench, after referring to the decision in the case of Commissioner of Income-tax vs. State Bank of Travancore reported in (1997) 228 ITR 40 (Ker), held that interest on loans and advances and the additional discount charges would not attract the provisions of the Interest Tax Act. The operative portions of the judgment read as follows:- 3. To decide the issue whether the additional discount charges are not liable to tax under Interesttax Act, it is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for delayed payment of bills of entry were in the nature of interest on advances and exigible to tax under the Act. 15.The High Court of Karnataka, in the case of State Bank of Mysore vs. Commissioner of Income-tax reported in (1989) 175 ITR 607 (Kar.), held that interest is the damages or compensation for delayed payment of money due and therefore, the expression 'compensation' in Section 32 of the Negotiable Instruments Act, will include interest paid by way of damages or compensation for delayed payments. It was further, held that any amount collected by the Bank cannot be anything but interest, whatever may be the nomenclature, and is chargeable interest for the purpose of Interest Tax Act. 16.All the aforementioned decisions we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the reasoning contained in the judgments of the High Court, which differ from the High Court of Karnataka is correct. The Court then proceeded to deal with the expression interest as defined under the Income Tax Act in Section 2(28A) and held as follows:- 18.It will be noticed that this definition is much wider than that contained in Section 2(7) of the Interest Tax Act, 1974. The expression payable in any manner in respect of any moneys borrowed is an expression of considerable width. It will be noticed that the aforesaid language of the definition section contained in the Income Tax act is broader than that contained in the Interest Tax Act in three respects. Firstly, interest can be payable in any manner whatsoever. Secondly, the expr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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