Db Income Tax Appeal v. State Bank Of Bikaner & Jaipur

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR *** Judgment (1) DB Income Tax Appeal No.201/2005Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (2) DB Income Tax Reference No.87/1983State Bank of Bikaner & Jaipur Vs.Commissioner of Income Tax . (3) DB Income Tax Reference No.58/1995State Bank of Bikaner & Jaipur Vs.Commissioner of Income Tax (4) DB Income Tax Appeal No.67/2004State Bank of Bikaner and JaipurVs. The Commissioner of Income Tax & anr. (5) DB Income Tax Appeal No.82/2004State Bank of Bikaner and Jaipur Vs. The Commissioner of Income Tax & anr. (6)DB Income Tax Appeal No.83/2004State Bank of Bikaner and Jaipur Vs. The Commissioner of Income Tax & anr. (7) DB Income Tax Appeal No.91/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (8) DB Income Tax Appeal No.93/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (9) DB Income Tax Appeal No.94/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (10) DB Income Tax Appeal No.96/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs.State Bank of Bikaner & Jaipur (11) DB Income Tax Appeal No.97/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (12) DB Income Tax Appeal No.100/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (13) DB Income Tax Appeal No.101/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (14) DB Income Tax Appeal No.105/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (15)DB Income Tax Appeal No.130/2004State Bank of Bikaner and JaipurVs. The Commissioner of Income Tax & anr. (16) DB Income Tax Appeal No.135/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (17) DB Income Tax Appeal No.153/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs. State Bank of Bikaner & Jaipur (18) DB Income Tax Appeal No.155/2004Commissioner of Income Tax Jaipur-II, JaipurVs. State Bank of Bikaner & Jaipur Reportable (19) DB Income Tax Appeal No.156/2004Commissioner of Income Tax Jaipur-II, JaipurVs. State Bank of Bikaner & Jaipur (20) DB Income Tax Appeal No.157/2004Commissioner of Income Tax Jaipur-II, Jaipur Vs.State Bank of Bikaner & Jaipur (21) DB Income Tax Appeal No.181/2005Commissioner of Income Tax Jaipur-II, Jaipur Vs.State Bank of Bikaner & Jaipur (22) DB Income Tax Appeal No.230/2005Commissioner of Income Tax Jaipur-II, Jaipur Vs.State Bank of Bikaner & Jaipur Judgment reserved on:::18[th] September, 2014Judgment pronounced on::: 12[th] November, 2014 PRESENTHON'BLE MR. JUSTICE AJAY RASTOGI.HON'BLE MR. JUSTICE J.K. RANKA. Mr. RB Mathur, Adv.,] for Mrs. Parinitoo Jain, Adv.] Revenue Mr. SM Mehta, Sr. Adv. with ]Ms. Pallivi Mehta, Adv.]Mr. PK Kasliwal, Adv.] for AssesseeMr. CM Sharma, Adv.] By the Court : (Per Hon'ble Ranka, J.) 1.These Income Tax References and Income TaxAppeals relating to various assessment yearscommencing from 1975-76 to 1999-2000 between thesame parties, are directed against order of the IncomeTax Appellate Tribunal (for short, 'ITAT')under Interest Tax 2.Some of the appeals/references are by theassessee while some of the appeals/references are by therevenue and since the facts, controversy and questionsinvolved in all the cases being similar, with the consent ofthe parties, the bunch of cases are being decided by thiscommon order. Mr. RB Mathur, Adv.,] for Mrs. Parinitoo Jain, Adv.] Revenue Mr. SM Mehta, Sr. Adv. with ]Ms. Pallivi Mehta, Adv.]Mr. PK Kasliwal, Adv.] for AssesseeMr. CM Sharma, Adv.] By the Court : (Per Hon'ble Ranka, J.) 1.These Income Tax References and Income TaxAppeals relating to various assessment yearscommencing from 1975-76 to 1999-2000 between thesame parties, are directed against order of the IncomeTax Appellate Tribunal (for short, 'ITAT')under Interest Tax 2.Some of the appeals/references are by theassessee while some of the appeals/references are by therevenue and since the facts, controversy and questionsinvolved in all the cases being similar, with the consent ofthe parties, the bunch of cases are being decided by thiscommon order. 3.Brief facts, which can be noticed, are that theassessee-bank is a subsidiary of the State Bank of Indiaand is in the banking industry for the last several yearsand is involved in the activity of advancing money andreceiving money from various persons. The controversy inall these cases relates to Interest Tax Act, 1974.Following substantial questions of law have been referredto by the ITAT in the reference applications, later onfollowing substantial questions of law have been admittedby this Court u/s 260A and emerge for consideration inthe present bunch of references and appeals:- “1. Whether in the facts andcircumstances of the case, the ITAT wasjustified in holding that amount paid bythe assessee to the IDBI, RBI on re-discounting of bills are not part ofinterest income and as such notchargeable to interest tax? 2. Whether in the facts andcircumstances of the case, the ITAT wasjustified in law in holding that the amountof subsidy received by the assesseefrom RBI under the Export Credit(Interest Subsidy), 1968 is not liable tointerest tax? 3. Whether on the facts and in thecircumstances of the case, the IncomeTax Appellate Tribunal was right in lawin holding that overdue interestamounting to Rs.49,54,371/- charged bythe bank was chargeable amount underthe Interest Tax Act? 4. Whether in the facts andcircumstances of the case and in lawthe ITAT was justified in law in holdingthat the guarantee fee/commissionshown by the assessee itself under thehead of interest is not liable to tax underthe Interest Tax Act?” 4.At the outset, it would be appropriate to quotedefinition of interest as provided under Sec. 2(7) of theInterest Tax Act, 1974, as the issues by and large hingeson what constitutes interest under the said Act, whichreads ad-infra:- “2(7) 'interest' means interest on loansand advances made in India and includes- (a) commitment charges on unutilisedportion of any credit sanctioned for beingavailed of in India ; and (b) discount on promissory notes andbills of exchange drawn or made in India, butdoes not include- (i) any amount chargeable to IncomeTax under the Income Tax Act, under the head“ Interest on securities” ; (ii) discount on treasury bills ; (iii) interest on moneys lent for thecreation of a capital asset in India where theagreement under which such moneys are lentprovides for the repayment thereof during aperiod of not less than seven years; (iv) interest on any deferred credit(that is to say, credit on the terms that thepayment is to be deferred) sanctioned by ascheduled bank in connection with the exportof capital plant and machinery outside India; (v) interest on any loan in foreigncurrency sanctioned by any Corporation orbank referred to in Sub-clause (a) or Sub-clause (b) or Sub-clause (c) or Sub-clause (d)of Clause (9) for the import of capital plant andmachinery from a country outside India.” 5.We will briefly discuss on the aforesaid questions inseriatim. --(Question No.1): Rediscount paid to RBI/IDBI: (iv) interest on any deferred credit(that is to say, credit on the terms that thepayment is to be deferred) sanctioned by ascheduled bank in connection with the exportof capital plant and machinery outside India; (v) interest on any loan in foreigncurrency sanctioned by any Corporation orbank referred to in Sub-clause (a) or Sub-clause (b) or Sub-clause (c) or Sub-clause (d)of Clause (9) for the import of capital plant andmachinery from a country outside India.” 5.We will briefly discuss on the aforesaid questions inseriatim. --(Question No.1): Rediscount paid to RBI/IDBI: 6.The claim of the bank is that the bank discountsvarious bills of its constituents (borrowers) and thediscount earned on such bills is credited to discountaccount. The contention of the bank is that some of thesebills are passed on to the RBI/IDBI for re-discounting andon such passing of the bills, the bank has to pay discountto the RBI/IDBI thus the discount earned by the bankwould be the discount minus re-discount charges paid toRBI/IDBI and thus amount paid is allowable as adeduction out of the total amount earned and only net is tobe considered as chargeable under the Interest Tax Act. Learned counsel for the assessee relied upon followingjudgments in support of his submission:- (1)CIT Vs. State Bank of Indore (1987) 172ITR 24 (MP); (2)CIT Vs. Canara Bank (1988) 175 ITR 601(Kar.); (3)CIT Vs. Bank of Maharashtra (2003) 264ITR 568 (Bom.); (4)CIT Vs. Canara Bank (2007) 293 ITR 115(SC). 6.1.Per contra, the claim of the revenue is that thesaid amount, which has been paid to the RBI/IDBI, is notrequired to be deducted as it is paid separately by thebank and there is no reason or co-relation with thediscount earned on such bills. 6.2We have considered the arguments advancedby counsel for the parties and the material on records. Inour view, the bank has paid amount to the RBI/IDBI underthe Industrial Development Bank of India Bill Re-discounting Scheme and there is a direct nexus/co-relation with the payment made to the RBI/IDBI and whatwas received from the borrower. Therefore, the claim ofthe bank, in our view, is justifiable. There is an overridingtitle of the RBI/IDBI and a direct co-relation/nexus of suchbills re-discounted and the re-discount rates of RBI/IDBIcollected by the bank which in our view, cannot be chargeable interest, in as much as even before the saidamount reached the hands of the assessee, it wasimpressed with the character of re-discount chargespayable to the IDBI or RBI, as the case may be. TheHon'ble Apex Court had an occasion to consider this issuein the case of CIT Vs. Canara Bank (2007) 293 ITR 115(SC) and after analyzing the material on record and aftergoing through the entire scheme, observed as under:- “Under the Scheme, the primary responsibilityfor payment to IDBI is placed on the seller'sbank which in the present case is theassessee-bank. Therefore, the rediscountingcharges of IDBI collected by the assessee-bank cannot be “chargeable interest” undersection 2(7) of the 1974 Act since even beforethe said amount could reach the hands of theassessee-bank, it is impressed with thecharacter of rediscounting charges payable toIDBI. The Scheme, viewed as a whole, makesit clear that the assessee-bank is only themedium for the disbursement of thedevelopment fund for the implementation ofthe Scheme for which the assessee-bank isallowed to retain 1.75 per cent., Whichaccrues to the assessee-bank and, therefore,it is not possible to bifurcate the transactionwhich has to be read in its entirety.” 6.3.In view of the above, this question is no moreres-integra and even counsel for the revenue concededAccordingly, the aforesaid question is answered in favourof the assessee and against the revenue. -(Question No.2): Subsidy received from the RBI: 6.3.In view of the above, this question is no moreres-integra and even counsel for the revenue concededAccordingly, the aforesaid question is answered in favourof the assessee and against the revenue. -(Question No.2): Subsidy received from the RBI: 7.The next question for consideration is with regardsto the subsidy received by the assessee from the RBI onexport credit loans. It was the claim of the assessee thatas per the scheme of the RBI, the assesse bank used toadvance money to various exporters to carry out exportbusiness. Such advances generally are termed as packingcredit and as per the scheme of the RBI, banks arerequired to charge interest on such advances at thespecific rates provided under the said scheme. The RBIwould grant subsidy to the bank for the shortfall in interestreceived from the customer. On perusal of aforesaid facts,it is clear that such subsidy is not received from thecustomers and is not relatable to what was lended &advanced by the bank, hence it cannot be treated asInterest as provided u/s 2(7) of the Act. Subsidy receivedfrom RBI is in the form of support to the bank and cannotbe equated to interest. On close perusal of definition ofinterest, it is borne that only interest on loans and advances made in India is covered. Since loan andadvance has not been made to RBI, thus would not comeunder the purview of Interest, at all. 7.1At the outset, ld. counsel for the assesseecontended that the latest judgment of the Delhi HighCourt, rendered in the case of Punjab National Bank Vs.CIT : (2011) 332 ITR 337 against which even the SLP wasrejected by the Hon'ble Apex Court vide its judgmentreported in (2008) 307 ITR (Statues) 4 and contended thatthe Delhi High Court judgment has been upheld by theHon'ble Apex Court and the issue being identical iscovered in favour of the assessee. 7.2.Ld. counsel for the revenue also conceded thisfactum and accordingly on the above concession andissue being covered, this question is also answered infavour of the assessee-Bank and against the Revenue. (Question No.3): Overdue Interest on inland/foreigndemand bills:- 8.The next question, which emerges for considerationis the nature of “overdue interest” on inland/foreigndemand bills. The contention of the assessee bank is thatthe “overdue interest” on inland/foreign demand bill does not form part of the interest as it is in the nature ofliquidated damages or/and penalty or/and compensationand is not in the nature of interest on loans and advancesmade by the bank. The claim of the bank further is that itdoes not fall within the ambit of Sec. 2(7) of the InterestTax Act and was out of the purview of taxability. 8.1.Learned counsel for the assessee contendedthat merely because the nomenclature “overdue” hasbeen indicated by the assessee, does not change thenature of receipt and real income has to be taxed and theso-called overdue interest does not fall within the ambit ofSec. 2(7) of the Interest Tax Act and it is neither a loannor advance by the bank. It was further contended thatthe charges for delayed payments are recovered fromperson who is not a borrower of the bank, as after the duedate such relationship ends. It was further contended thatafter the due date, if anything is recovered by the bank,the character of the receipt changes and does not fallwithin the ambit and definition of Interest under theInterest Tax Act. He further relied upon the judgmentsrendered in CIT Vs. State Bank of Travancore (1997) 228ITR 40 (Kerala); CIT Vs. State Bank of Indore (1988) 172ITR 24 (MP); CIT Vs. Corporation Bank (2007) 295 ITR 193 (SC); CIT Vs. Canara Bank (1988) 175 ITR 601(Kar.); CIT Vs. Cholamandalam Investment & Finance Co.Ltd. (2008) 296 ITR 601 (Mad.); CIT Vs. Vijaya Bank(2006) 285 ITR 97 (Kar.); CIT Vs. State Bank of Mysore(2009) 315 ITR 278 (Kar.). 193 (SC); CIT Vs. Canara Bank (1988) 175 ITR 601(Kar.); CIT Vs. Cholamandalam Investment & Finance Co.Ltd. (2008) 296 ITR 601 (Mad.); CIT Vs. Vijaya Bank(2006) 285 ITR 97 (Kar.); CIT Vs. State Bank of Mysore(2009) 315 ITR 278 (Kar.). 8.2.The contention of the revenue, on the contrary,is that the very nature of the term ''overdue interest'',which is also credited by the assessee under the headinterest sufficiently shows that is is taxable u/s2(7) of theAct. The overdue interest is directly related to theadvances made by the bank on the purchase of demandbill from its constituents and is certainly liable to be taxedas interest within the definition of Sec. 2(7) of the InterestTax Act. 8.3.Learned counsel for the Revenue furthercontended that the “overdue interest” is directly related tothe advance made by the bank on the purchases ofdemand bills from its constituents and once the bank itselfadmits that it is in the nature of “overdue interest”, thenthere is a direct nexus with the loan and advances madeby the assessee bank. It is further contended that theloans/advances were extended by the bank on an agreed rate of interest and even after the due date, the characterand the nature of the transaction remains the same and“overdue interest” is certainly liable to be taxed under theInterest Tax Act. It is further contended that the definitionof interest u/S 2(7) is comprehensive to cover even the socalled damages/liquidated penalty/compensation and itwould certainly fall within the ambit and scope of Section 2(7). Counsel in support of this contention relied upon thejudgment rendered by Karnataka High Court in the case ofState Bank of Mysore Vs. CIT, reported in (1988) 175 ITR607 and Punjab and Haryana High Court in the case ofCIT Vs. State Bank of Patiala, reported in (2006) 300 ITR395. He further contended that apart from Kerala HighCourt and Madhya Pradesh High Court relied upon by theassessee all are distinguishable. 8.4.We have considered the rival submissions andwith assistance perused the material on record. We mayobserve that the Tribunal for the assessment years 1975-76 to 1996-97 had decided the issue of “overdue interest”against the assessee bank, however, after the judgmentof the MP High Court was rendered in the case of CIT Vs.State Bank of Indore (supra); the Tribunal changed itsown view thereafter from the assessment year 1997-98 and onwards. 8.5.The cardinal principle of interpretation on thefiscal laws is that it should be construed strictly. So long,the provision is free from ambiguities, there could be noneed to draw an analogy and the meaning of the provisionis plain and clear the person cannot be subjected to tax. 8.6.The principle of strict interpretation of taxingstatutes was enunciated by Rowlatt J. in his classicstatement in Cape Brandy Syndicate Vs. I.R.C. reported in(1921) 1 KB 64(KB) 71: “In a taxing statute one has to look merely atwhat is clearly said. There is no room forintendment. There is no equity about a tax.There is no presumption as to a tax. Nothingis to be read in, nothing is to be implied. Onemust only look fairly at the language used.” 8.7.The definition of “interest” under the Interest Tax Act is comprehensive and devoid of any ambiguity.The words employed in the said definition clearly envisagethat only the interest on loans and advances is exigible totax under the Interest Tax Act. The Apex Court has alsostated in A.V. Fernandez Vs. State of Kerala (1957) AIR657 (SC) the following fiscal principle : “ If the Revenue satisfies the court that the case falls strictly within the provisions ofthe law, the subject cannot be taxed. If on theother hand, the case is not covered within thefour corners of the provisions of the taxingstatute no tax can be imposed by inference orby analogy or by trying to probe into theintentions of the Legislature and byconsidering what was the substance of thematter.” 8.7.The definition of “interest” under the Interest Tax Act is comprehensive and devoid of any ambiguity.The words employed in the said definition clearly envisagethat only the interest on loans and advances is exigible totax under the Interest Tax Act. The Apex Court has alsostated in A.V. Fernandez Vs. State of Kerala (1957) AIR657 (SC) the following fiscal principle : “ If the Revenue satisfies the court that the case falls strictly within the provisions ofthe law, the subject cannot be taxed. If on theother hand, the case is not covered within thefour corners of the provisions of the taxingstatute no tax can be imposed by inference orby analogy or by trying to probe into theintentions of the Legislature and byconsidering what was the substance of thematter.” 8.8.The assessee-bank got right to charge theamount for the delay in payment of bills accrued to theassessee by virtue of the provisions of Sec. 132 of theNegotiable Instrument Act, 1881 and in accordance withthe terms of the agreement, that its constituents(borrowers), the bills were purchased by the assesseeand on account of the delayed payment of bills, theassessee became entitled to liquidated damages by wayof compensation from the borrower. The right to chargethat amount by the assessee did not, therefore, arise onaccount of any delay in re-payment of any loan oradvances made by the assessee. It may be that theamount payable by way of compensation for detention ofa sum of money due, can be said to be covered by theexpression “interest” in its widest sense including interestproper and interest by way of damages but the provisionof the Interest Tax Act can be said to be attracted only incase of interest received on loans and advances. However, the transaction ends on the due date occursand the relationship of borrower lender ends. 8.9. In our view, the scope and definition of the term“interest” cannot be interpreted to bring within its fold anyincome that is booked by an assessee under the headinterest. The character of an overdue bill is notsynonymous with the loans and advances and, therefore,it will not fall within the ambit and scope of interest u/s 2(7) of the Interest Tax Act. The Parliament in its ownwisdom has not included any amount that is recovered inthe form of interest, penalty or otherwise under thedefinition of Interest and had it been so, such nature ofamount as contended by the revenue could have beenbrought within the ambit and scope of interest. 8.10. We are further of the view that on the duedate/cutoff date whatever amount has been recovered bythe assessee bank, will certainly fall in the nature ofinterest, but once the due date/cutoff date is over, anyamount received after that date by the bank, would be inthe nature of compensation/penalty/liquidated damagesand will not be “interest”. It is well settled preposition oflaw that the way in which entries are made by an assessee in its books of account or the nomenclaturegiven to a transaction by the parties is not determinative ofthe due character/nature of that transaction. The definitionas we have pointed out of ''interest'', shall not cover theamount received by the assessee after the due date. 8.11.We have gone through the judgmentsrendered by various High Courts as quoted above and arenot in conformity with the view of Karnataka and Punjaband Haryana High Court and we concur with the view ofMadhya Pradesh & Kerala High Court. Recently theTelangana and Andhra Pradesh High Court also had anoccasion to consider the same issue in the case of CITVs. State Bank of Hyderabad: (2014) 367 ITR 128 andafter considering the same issue, as is being examined bythis Court and have come to the conclusion that theamount received after due date is not in the nature ofinterest. 8.11.We have gone through the judgmentsrendered by various High Courts as quoted above and arenot in conformity with the view of Karnataka and Punjaband Haryana High Court and we concur with the view ofMadhya Pradesh & Kerala High Court. Recently theTelangana and Andhra Pradesh High Court also had anoccasion to consider the same issue in the case of CITVs. State Bank of Hyderabad: (2014) 367 ITR 128 andafter considering the same issue, as is being examined bythis Court and have come to the conclusion that theamount received after due date is not in the nature ofinterest. 8.12.Accordingly, in our view, the amount receivedas “overdue interest” in inland/foreign demand bills is notliable to be taxed as interest under the Interest Tax Actand we answer this question in favour of the assesseeand against the revenue. (Question No.4): Guarantee Fees Paid to DepositInsuranceand Credit Guarantee Corporation-(DICGC): 9.The contention of the assessee is that the guaranteecommission is an incidental service charge which theassessee bank collects from its constituents (borrowers)and passes the same to the Deposit Insurance and CreditGuarantee Corporation of India (DICGC) in totality andthat the assessee bank pays the guarantee fee to theDICGC in advance and thereafter it recovers the amountfrom its constituents and thus it does not fall in the natureof interest. However, contention of the revenue on thecontrary has been that whatever is recovered/charged bythe assessee from the constituents (borrower) willsquarely fall within the definition of interest though may betermed as guarantee commission or otherwise. Therevenue also contended that paying any advance to theDICGC would certainly not make any difference asultimately the assessee is recovering/charging certainamount and is also being credited by the assessee in itsbooks of accounts as “interest” and according to therevenue, it is in the nature of interest. 9.1.Learned Counsel for the assessee contended that by taking such insurance, each depositor of the bankis insured upto a certain amount and in case ofcancellation/closure/liquidation of Bank minimumguaranteed amount is received by the bank. The bank inturn collects the insurance charges from its constituents,the amount received is thus merely an incidental andservice charge and not in the nature of interest. He furthercontended that merely making entries in the books ofaccounts or crediting the said amount by way of interestcannot change the character of the receipt and everyreceipt cannot be in the nature of interest and in thepresent case, though the assessee might have creditedthe same as interest, but it is certainly not interest underthe Interest Act and in support of his submission, he reliedupon judgment of the Hon'ble Apex Court in the case ofSutlej Cotton Mills Ltd. Vs. CIT; reported in (1979) 116ITR 1 and Godhara Electricity Company Ltd. Vs. CIT(1997) 225 ITR 746 wherein it was held that the way inwhich entries are made by an assessee in his books ofaccounts is not determinative of the question whether theassessee has earned any profit or suffered any loss. Theassessee by making entries which are not in conformitywith the guiding principles of accountancy, may concealprofit or show loss and the entires made by him cannot, therefore, be regarded as conclusive, what is necessary tobe considered is the true nature of the transaction andwhether in case it has resulted in profit or loss to theassessee. Ld. counsel thus contended that the amountas collected was passed on to the DICGC and he furthercontended that even if it can be termed as interest, thenthe entire amount was passed on to the DICGC and that iftaxed interest at the end of the day, nothing remains withthe assessee. therefore, be regarded as conclusive, what is necessary tobe considered is the true nature of the transaction andwhether in case it has resulted in profit or loss to theassessee. Ld. counsel thus contended that the amountas collected was passed on to the DICGC and he furthercontended that even if it can be termed as interest, thenthe entire amount was passed on to the DICGC and that iftaxed interest at the end of the day, nothing remains withthe assessee. 9.2.Per-contra, learned counsel for the revenuecontended that the nature of the transaction itself speaksthat it is in the nature of interest and was also shown asinterest in the books of accounts and when it has beenshown by way of interest, character remains the same asthat of interest. He further contended that, had it been so,the assessee ought to have credited the said amountwhich has been charged by the assessee from theconstituents (borrower) as incidental charges or servicecharges for onward payment to DICGC. He alsocontended that there is nothing on record to show thatassessee paid in advance and collected later fromconstituents and no reason has been assigned, why onewould pay in advance when no occasion arose for payment at all, by this, he wanted to bring home to thepoint that there is no correlation with amount collectedand paid and retained. Thus contended that the issue isrequired to be decided in favour of revenue. 9.4.We have considered the rival contentions andIn our view, the term interest as defined under the InterestTax Act is distinctive as against the term 'Interest” definedunder the Income Tax Act. Sec. 2(28-A) of the IncomeTax Act, 1961 defines Interest as under:- “interest means interest payable in any manner inrespect of any moneys borrowed or debt incurredincluding a deposit, claim or other similar right orobligation and includes any service fee or othercharges in respect of money as charge or debtincurred or in respect of any credit facility whichhas not been utilized.” On conjoint reading of the definition of interest,which has been quoted herein above and under theInterest Tax Act in para 4 (supra), it is noticed that theInterest Tax Act, does not include the term “any servicefee or other charges in respect of money charge or debtincurred.” under its ambit and putting to test the principleof harmonious interpretation, it is evident that theparliament in its wisdom has chosen not to add theaforesaid terminology under the Interest Tax Act, andwhat has not been mentioned neither be added nor is required to be read in between the lines. We have alreadyobserved about principles of interpretation in para 8.5 and8.6 (supra) and mere crediting the said amount as interestwill certainly not entitle the revenue to treat the same asinterest. Hon'ble Apex Court in the case of Sutlej CottonMills and Godhra Electricity (supra) have clearlyexpressed that mere crediting the amount under a head isnot determinative of the real nature and real intent andpurpose of the transaction is required to be seen.Therefore, we hold that the amount recovered by theassessee from the constituents (borrower) cannot betaxed as interest in the hands of the assessee. On perusalof definition, it is distinctively clear that such chargesrecovered by the bank cannot be equated to the terminterest under the Act. Though the receipt of GuaranteeFees received from constituents (borrowers) is not linkedto what is paid to DICGC as insurance cover on behalf ofdepositors, the issue is not relevant for the reason statedby us herein above. 9.5.The question of law is decided in favour of theassessee and against the revenue. 10.All the four questions are answered in favour of the assessee Bank and against the revenue, accordingly andthe bunch of appeals/references stand disposed of in theterms indicated with no order as to costs. [J.K. RANKA],J. ,J. Raghu/p.23/ 9.5.The question of law is decided in favour of theassessee and against the revenue. 10.All the four questions are answered in favour of the assessee Bank and against the revenue, accordingly andthe bunch of appeals/references stand disposed of in theterms indicated with no order as to costs. [J.K. RANKA],J. ,J. Raghu/p.23/ Certificate:All corrections made in the judgment/order have been incorporated inthe judgment/order being e-mailed.Raghu, Sr. PA.