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TMI Blog2022 (1) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... , while retaining the business of finance and investments. During the assessment years 1997-98, 1998-99, 1999-2000 and 2000-2001, the appellant had made loans and advances and credited interest in the profit and loss account. But, they had not filed returns under the Interest Tax Act, 1974. 4. According to the Assessing Officer, since the appellant carried on the business of finance and investment as a finance company as defined in section 2 (5B) of the Interest Tax Act and the interest earned by it was within the purview of section 2(7) of the Act, notices under Section 148 read with section 10 of the Interest Tax Act, 1974 came to be issued on the premise that chargeable interest had escaped assessment. In response to the same, the appellant filed its return disclosing 'nil' chargeable interest, stating that its principal business is not lending and financing and thus they do not come within the purview of the Interest Tax Act, 1974. Being dissatisfied with the same, the assessing authority rejected the plea of the appellant and passed the assessment orders for the assessment years in question, the details of which are tabulated below: S.No Assessment Year Chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate authorities have treated the appellant as constituting "any other financial company"in terms of Section 2(5A)(iv) of the Interest Tax Act, 1974, thereby qualifying as a "taxable person" for the purpose of attracting the charge under the Interest Tax Act, 1974, though the assessments were made by the assessing authority, treating the appellant as a residuary non-banking finance company falling under section 2(5B) (va) of the Interest Tax Act, 1974. 8. To answer the above questions, it may be relevant to refer to the following provisions under the Interest Tax Act, 1974, which read as under: "2.Definitions.-In this Act, unless the context otherwise requires, * * * (5) 'chargeable interest' means the total amount of interest referred to in Section 5, computed in the manner laid down in Section 6; (5-A) '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 in Section 51 of that Act); (ii) a public financial institution as defined in Section 4-A of the Companies Act, 1956 (1 of 1956); (iii) a State Financial Corporation established under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the 1st day of April, 1992, interest tax in respect of its chargeable interest of the previous year at the rate of three per cent 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 31st day of March, 1997 shall be two per cent of such chargeable interest. (3) Notwithstanding anything contained in sub-sections (1) and (2), no interest tax shall be charged in respect of any chargeable interest accruing or arising after the 31st day of March, 2000. 5.Scope of chargeable interest.-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 cooperative 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant as any other Finance Company and brought to tax the interest credited in the accounts. I therefore, confirm the action of the AO." Tribunal: "....On going through the above noted conclusion of ld. CIT(A), we find that the basis and reasoning as given by the Id. CIT(A) in this regard are sound and convincing who is found to have considered each and every aspect of matter in detail. Since neither any infirmity or flaw has been pointed nor noticed by this Bench, which could justify any interference in the conclusion as drawn by the Id. CIT(A) therefore, while concurring with the finding of the Id. CIT(A), we upheld his action and dismiss this ground of appeal of the assessee for all the years." 10. It appears from the aforesaid findings of the Authorities below that the assessing authority has proceeded with the case of the appellant on the premise that the appellant would fall within the meaning of "residuary non-banking financial company". 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 extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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