TaxTMI 
TaxTMI 
2006 (2) TMI 215
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.... interest-tax in respect of income from interest on securities. l(iii). The learned Departmental Representative-CIT(A) ought to have appreciated that assessee is not a banking company to which the Banking Regulations Act applies." 3. Smt. Sangeeta Gupta, CIT - Departmental Representative supported the order of AO and challenged the order of learned CIT(A) for both the assessment years in question. Learned counsel for the assessee, Shri M.S. Syali, on the other hand, supported the order of the learned CIT(A). He also placed reliance on the order of Tribunal Special Bench in the case of Housing & Urban Development Corporation Ltd. vs. Jt. CIT, dt.25th Nov., 2005rendered by the Tribunal, Delhi Bench "E". 4. We have considered the entire material on record. The assessee had made investment in Government securities in the shape of Kisan Vikas Patras (KVP) and debentures, etc. It had not included the income from these securities because the same was not in the nature of interest on loans and advances as per the assessee. The AO was, however, of the view that the investment made by the assessee in Government securities was chargeable to Interest-tax Act. He, therefore, added Rs. ....
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....p by stating that in the case of loan, the needy person approaches the lender for obtaining the loan therefrom. The loan is clearly lent at the terms stated by the lender. In the case of deposit, however, the depositor goes to the depositee for investing his money primarily with the intention of earning interest. In view of his legal position, it has to be held that interest on deposits representing investment of surplus funds would also not fall under the definition of interest as given in s. 2(7) of the Act and as such would not be liable to interest-tax. The answer to the question under reference in our humble opinion is that investments made by way of short-term deposits and also in the form of securities and bonds cannot be considered as loans and advances and as such interest thereon shall be outside the scope of "interest" defined under s. 2(7) of the Act." 7. Thus, issue stands fully covered in favour of the assessee by the order of the Special Bench. The learned Departmental Representative has not been able to point out any other contrary decision and, therefore, respectfully following the decision of the Special Bench, we uphold the order of learned CIT(A) in both the ....
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....9 (SC) and CBDT Circular No. 760, dt.13th Jan., 1998. The case law referred by the assessee was examined by the CBDT and vide Circular No. 760, dt.13th Jan., 1998has observed that the AO may be advised to examine each transaction in the above light and charge interest-tax in such of those transactions which are not in the nature of hire-purchase. The case of the assessee-company was carefully examined and its transactions were not found in the nature of genuine hire-purchase transaction." 10. Similar approach has been followed by him in subsequent years. 11. The learned CIT(A) decided the appeal for asst. yrs. 1996-97 and 1997-98 by a common order. After considering the nature of the transactions in the light of various clauses of the agreement and after considering the circular of the CBDT, as well as the decision of Hon'ble Supreme Court in the case of Sundaram Finance Ltd. vs. State of Kerala (1966) 17 STC 489 (SC) and the decision in the case of Instalment Supply (P) Ltd. vs. Union of India 125 STC 489, in detail, he has observed that the transactions entered into by the assessee with the customers were only hire-purchase transactions and it could not be held that the tra....
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.... further pointed out that the invoices were directly issued by the company in the name of hirers and thus the vehicles stood owned by the hirers whereas in the case of the present assessee, the company was the owner and the invoices were issued in its name and not in the name of the hirers. He, thus, distinguished the decision of Agra Bench of Tribunal reported in (2004) 83 TTJ (Agra) 809 : (2004) 88 ITD 620 (Agra). 14. Learned counsel for the assessee, on the other hand, placed reliance on the order of Lucknow Bench of the Tribunal in the case of Commercial Motors Finance Ltd. vs. Asstt. CIT (2002) 76 TTJ (Lucknow) 918 : (2002) 82 ITD 176 (Lucknow). 15. On going through the order of learned CIT(A), it is found that he has compared the features of hire-purchase transactions and features of financing transactions and also considered cl. 4 and cls. 11, 14 of the agreement. He has also considered the basic features stated in the case of Sundaram Finance and Instalment Supply (P) Ltd. and after testing the facts on the test of the preposition laid down in these two decisions and also after taking into consideration the relevant Board circular he found that the assessee was the ow....