https://www.taxtmi.com/caselaws?id=24982 The dominant issue is whether amounts charged for delayed payment of bills constitute "interest on loans and advances" within s.2(7) of the Interest-tax Act. The HC held that book entries or nomenclature are not decisive; the test is the true nature of the transaction. Although compensation for detention may fall within a broad notion of interest, the Act applies only to interest on loans and advances, and the right to charge arose from default in bill payment, not from repayment of a loan or advance. Further, under the bills-rediscounting scheme the rediscounting charges paid to the finance institution (which held an overriding title) are not exigible to tax under the Interest-tax Act. Consequently, the amounts charged were not taxable under the Act. en-us Fri, 06 Nov 1987 00:00:00 +0530 Wed, 14 Jan 2026 11:23:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=24982 The dominant issue is whether amounts charged for delayed payment of bills constitute "interest on loans and advances" within s.2(7) of the Interest-tax Act. The HC held that book entries or nomenclature are not decisive; the test is the true nature of the transaction. Although compensation for detention may fall within a broad notion of interest, the Act applies only to interest on loans and advances, and the right to charge arose from default in bill payment, not from repayment of a loan or advance. Further, under the bills-rediscounting scheme the rediscounting charges paid to the finance institution (which held an overriding title) are not exigible to tax under the Interest-tax Act. Consequently, the amounts charged were not taxable under the Act. Case-Laws Income Tax Fri, 06 Nov 1987 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=24982