TMI Blog2022 (1) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authorities failed to mention the sub-clause to Section 2(5B) of the Interest Tax Act, 1974, under which the appellant would fall. On this score alone, we are inclined to set aside the order of the Tribunal and remand the matter to the Tribunal for fresh consideration. It is apt to refer to the decision of the supreme court in CWT v. Ellis Bridge Gymkhana [ 1997 (10) TMI 2 - SUPREME COURT ] in which, it was held that the rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section and no one can be taxed by implication . Thus we set aside the order impugned herein and remand the matter to the Tribunal for fresh consideration. The Tribunal shall examine the facts as regards the activity of the appellant, and set out under which sub clause to the definition of financial company under section 2(5B), the appellant company would fall, so as to attract charge under the Interest Tax Act, 1974 and thereafter, pass appropriate orders. Such an exercise shall be completed within a period of twelve (12) weeks from the date of receipt of a copy of this j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998-1999 72,790/- 3,164/- 3 1999-2000 20,81,238/- 1,34,006/- 4 2000-2001 38,62,126/- 2,48,680/- 5. Aggrieved by the orders of the assessing authority, the appellant carried the matter by way of appeals and further appeals before the Appellate Authorities viz., Commissioner of Income Tax (Appeals)-VIII, Chennai and the Income Tax Appellate Tribunal respectively. The appellant reiterated its stand as raised before the assessing authority that its principal business is not lending and financing and thus, the appellant company does not come within the purview of the Interest Tax Act, 1974, before the Appellate Authorities. However, it was held by both the Appellate Authorities that the income earned on account of the interest was liable to tax under the Interest Tax Act, 1974. Taking note of the object of the company as set out in the Memorandum of Association coupled with the fact that interest was offered as business income in the return of income filed by the appellant for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution as defined in Section 4-A of the Companies Act, 1956 (1 of 1956); (iii) a State Financial Corporation established under Section 3 or Section 3-A or an institution notified under Section 46 of the State Financial Corporations Act, 1951 (63 of 1951), and (iv) any other financial company; (5-B) financial company means a company, other than a company referred to in sub-clause (i), (ii) or (iii) of clause (5-A), being- (i) .... (ii) .... (iii) .... (iv) a loan company, that is to say, a company not being a company referred to in sub-clauses (i) to (iii) which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise; (v) .... (v-a) a residuary non-banking company other than a financial company referred to in sub-clauses (i), (ii), (iii), (iv) or (v), that is to say, a company which receives any deposit under any scheme or arrangement, by whatever name called, in one lump sum or in instalments by way of contributions or subscriptions or by sale of units or certificates or other instruments or in any other manner; or (vi) a miscellaneous finance company, that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat any interest in relation to categories of bad or doubtful debts referred to in Section 43-D of the Income Tax Act shall be deemed to accrue 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, in which it is actually received by the credit institution, whichever is earlier. A cumulative reading of the above provisions would make it clear that the charge under the Interest Tax Act, 1974 would get attracted on every credit institution for every assessment year commencing from 01.04.1992 in respect of Chargeable interest of the previous year. 9. Such being the position of law, we are now inclined to look into the findings of the Authorities below, for better appreciation of the issue at hand and the same are reproduced hereinbelow: Assessing authority ... it has come to light that the assessee company is not a Finance Company as defined in section 2(5B) of the Interest Tax Act, 1974. As evidenced by its MOA, its principal business is not lending and finance business. Hence, the assessee company had claimed that although it carried on the acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany . Whereas, the first appellate authority confirmed the order of the assessing authority, treating the appellant as any other financial company . The said order of the first appellate authority was affirmed by the Tribunal, by merely extracting the findings of the first appellate authority. Such course adopted by the Appellate Authorities does not appear to be correct, in the opinion of this court. 11. We find that the expression financial company as defined under section 2(5B) of the Interest Tax Act, 1974, means a company carrying on activities as enumerated in sub-clauses (iv) to (v) thereon. Both the appellate authorities have not set out the sub-clause to the definition of financial company which covers the appellant company. The said aspect relating to identifying the taxable person is an essential criterion for the charge to get attracted. However, the appellate authorities failed to mention the sub-clause to Section 2(5B) of the Interest Tax Act, 1974, under which the appellant would fall. On this score alone, we are inclined to set aside the order of the Tribunal and remand the matter to the Tribunal for fresh consideration. 12. At this juncture, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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