2008 (4) TMI 358

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....ent order that the assessee received income of Rs. 21,67,902 from Vyaj Badla transactions conducted at the Mumbai Stock Exchange. This amount was not included in the chargeable interest. It was explained that under the Act what can be brought to tax is interest on loans and advances. Income from investment at Bombay Stock Exchange for Vyaj Badla transactions was on account of purchase and sale of shares and, thus, it did not amount to interest on loans and advances. The AO considered the facts of the case and the submissions made before him. On perusal of the contract notes issued by M/s VAR Shares & Stock (P) Ltd., a member of the Bombay Stock Exchange, it was found that the word "interest" was used. Therefore, his finding was that Vyaj Ba....

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....decisions of the Hon'ble Gujarat High Court in the case of CIT vs. Sarladevi Sarabhai Trust No. 2 (1988) 70 CTR (Guj) 185 : (1988) 172 ITR 698 (Guj), in which, according to him, it was held that where the assessee deposited its funds in another concern without right of participation in profits, at a fixed rate of interest, and the value of the investment did not fluctuate, such deposit could be termed as loan within the meaning of s. 13(2)(a) of the Act. It was pointed out that the assessee had made short-term fund available to the contracting parties at the Bombay Stock Exchange on the date of settlement with a view to earn a fixed rate of interest. This rate may vary from transaction to transaction and from settlement to settlement. But, ....

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....interest shall be the total amount of interest (other than interest on loans and advances made to other credit institutions or to any co-operative society engaged in carrying on the business of banking) accruing or arising to the credit institutions. The term "interest" is defined under s. 2(7) to mean interest on loans and advances made in India. The definition contains certain exceptions, which are not relevant for our purpose. Reliance was placed on the order of the Hon'ble Tribunal, Delhi Bench "E", (Special Bench), in the case of Housing & Urban Development Corporation Ltd. vs. Jt. CIT (2006) 102 TTJ (Del)(SB) 936 : (2006) 5 SOT 918 (Del)(SB), in which a reference was made to the decision of the Hon'ble Allahabad High Court in the case....