Commissioner Of Income Tax,Chennai v. M/S.cholamandalam Investment & Finance Co. Ltd., Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.02.2007 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN T.C.(A).Nos.149 to 153 of 2004 Commissioner of Income Tax,Chennai...Appellant Vs. M/s.Cholamandalam Investment & Finance Co. Ltd., Chennai ..Respondent Appeals under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, 'A' Bench, Chennaidated 28.2.2006 in ITA Nos.70 to 74/Mds/2002 for the assessmentyears 1993-94 to 1996-97 and 1999-2000. against the order of theCommissioner of Income Tax (Appeals) Central I, Chennai dated6.6.2002 in ITA Nos. 2 to 6/2002 - 2003 for the assessment year1993-94, 1994-95 1995-96 1996-97 and 1999-2000 and against orderin PAN/GIR No.AAACC 1226 H dated 6.3.2002 dated 6.3.2002, dated7.3.2002, dated 7.3.2002 & dated 28.2.2002 of the Asst Commissionerof Income Tax Central Range I (4) Chennai 34.For Appellant :Mr. J.Narayanasamy, Jr.SC for IT -----J U D G M E N T (Delivered by P.D.DINAKARAN,J.) The above tax case appeals are directed against the order ofthe Income-tax Appellate Tribunal in ITA Nos.70 to 74/Mds/200228.2.2006, raising the following common substantial question oflaw. "Whether in the facts and circumstances of thecase, the Tribunal was right in excludingadditional discount charges from the chargeableinterest under the Interest Tax Act?" https://hcservices.ecourts.gov.in/hcservices/ 2.1. The assessee, a non-banking finance company, excludedadditional discount charges from chargeable interest for all theassessment years, but the assessing officer added the same aschargeable to interest under section 2(7) of the Interest Tax Act. 2.2. The Commissioner of Income-tax (Appeals), on appeal, heldthat the additional discount charges are not chargeable to interestunder Interest Tax Act. The Appellate Tribunal, on appeal,confirmed the order of the Commissioner of Income-tax (Appeals).Hence, the present appeal raising the substantial question of lawreferred supra. 3. To decide the issue whether the additional discount chargesare not liable to tax under Interest Tax Act, it is useful to referthe decision in C.I.T. v. State Bank of Travancore (228 ITR 40)wherein the Kerala High Court held that the character of an overduebill is wholly distinct from loans and advances and the interest onthe loans and advances alone is taxable under the Interest Tax Actand the character of an overdue bill is not synonymous with loansand advances and therefore, the interest on overdue bills is to beexcluded from chargeable interest under the Interest Tax Act. 4. Applying the above ratio to the facts of the case, we holdthat the interest Tax Act is attracted only in respect of intereston loans and advances and the additional discount charges which isan amount given as a premium, would not attract the provisions ofthe interest Tax Act. The Appellate Tribunal is therefore correctin excluding additional discount charges from the chargeableinterest under the Interest Tax Act. Finding no substantial question of law that arises for ourconsideration, the appeals are dismissed at the admission stageitself. na.Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar To 1.The Assistant Registrar,Income Tax Appellate Tribunal, Rajaji Bhavan,III Floor Besant Nagar, Madras.90Income Tax Appellate Tribunal, Rajaji Bhavan,III Floor Besant Nagar, Madras.90 2.The Commissioner of Income-Tax (Appeals), Central-1, Madras. 3.The Asst. Commr. of Income-tax,Central Range I(4), Madras. 4. The Commissioner of Income Tax, Chennai, + 1 cc to M/s. Pushya Sitaraman, Advocate SR No. 12026AVA(CO)SR/15.3.2007 T.C.(A).Nos.149 to 153 of 2007