https://www.taxtmi.com/circulars?id=5142 Hire-purchase receipts are not automatically interest under the Interest-tax Act, 1974; Assessing Officers must distinguish genuine hire-purchase arrangements from transactions that are in substance financing. Where the arrangement functions as security for repayment of a loan-e.g., the hirer is the real purchaser but does not pay the full price and the hire-purchase company advances purchase money-the hire-charges should be treated as interest and subject to interest-tax. Examinations should consider agreement terms, relationship among parties, and manifested intention, applying the Sundaram Finance tests. en-us Tue, 13 Jan 1998 00:00:00 +0530 Sat, 09 Aug 2008 17:02:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/circulars?id=5142 Hire-purchase receipts are not automatically interest under the Interest-tax Act, 1974; Assessing Officers must distinguish genuine hire-purchase arrangements from transactions that are in substance financing. Where the arrangement functions as security for repayment of a loan-e.g., the hirer is the real purchaser but does not pay the full price and the hire-purchase company advances purchase money-the hire-charges should be treated as interest and subject to interest-tax. Examinations should consider agreement terms, relationship among parties, and manifested intention, applying the Sundaram Finance tests. Circulars Income Tax Tue, 13 Jan 1998 00:00:00 +0530 https://www.taxtmi.com/circulars?id=5142