2014 (9) TMI 282

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....onble Sri Justice L. Narasimha Reddy) This appeal is preferred by the Revenue against the order, dated 14.12.2000, passed by the Hyderabad Bench A of the Income Tax Appellate Tribunal (for short, the Tribunal). The respondent is a financial institution. It entered into a hire purchase agreement with one of its customers in relation to a vehicle. In the return submitted by it, reference was made ....

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....e appeals by accepting the contention of the respondent i.e., the assessee. Hence, this appeal. Sri S.R. Ashok, learned Senior Standing Counsel for the Income Tax Department, submits that though the transaction in relation to a vehicle in question is termed as hire purchase, it has all the ingredients of a financial transaction. He submits that as against the total cost of the vehicle, only part ....

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....cles, they approach the agencies to arrange the same. Two courses are open in this behalf. The first is, where financial agency simply advances the required amount by levying interest. As a measure of security for repayment, the vehicle is hypothecated and endorsement to that effect is made in the registration certificate itself. The second is, where the agency, which arranges the finance, purchas....

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....of the vehicle was paid by the assessee, and what are the other terms, become immaterial. Realizing that the hire purchase agreements are very complex in nature, the Central Board of Direct Taxes issued guidelines and clarifications from time to time. The Tribunal has relied upon the clarifications issued through instruction No.1425, dated 16.11.1981. The relevant portion of it was extracted. The....