2006 (8) TMI 581

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....g that the respondent is liable to interest tax only on the net interest received by it and not the gross interest? (3)Whether the Appellate Tribunal is right in law and on facts in excluding the amount of upfront fees and other income received by the respondent in calculating the chargeable interest under the Income Tax Act, 1974 ? (4)Whether the Appellate Tribunal is right in law in holding that the amounts given to other corporations would be deposits and the interest thereon would not be chargeable interest under the Interest Tax Act, 1974?" So far as the Question No.1 is concerned, the tribunal has considered the issue as under : "We find force in the contention of the Ld.Counsel. Section 2(7) of the Income Tax Act defines as under....

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....as been further held that the assessee is liable to interest tax only on the net interest received by it. Therefore, in view of that, we are of the opinion that the learned CIT (A) has deleted the addition after following a number of decisions. We find no error in the order of learned CIT (A). Hence, this ground of appeal is rejected in all the Asst. Years." So far as the Question No.3 is concerned, the tribunal has considered the issue as under : "Before us, the learned DR relied upon the order of Assessing Officer, whereas learned counsel for the assessee relied upon the finding of the learned CIT (A). On perusal of record, we find that amount received by the assessee in the shape of fees - cum - service charges cannot be equaled with ....

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....meaning in the expression "Loans and Deposits", the Tribunal in the case of Oriental Insurance Co., vs. DCIT reported in 89 ITD 520 (Del) (Supra) observed as under " In view of the above provisions, the case of the revenue is that deposits with banks and other institutions would fall within the ambit of the word "loans". While the case of the assessee is that 'loans' and 'deposits' are different expressions having different meanings and, therefore, interest on deposits is not chargeable to tax. Out study reveals that 'loans' and 'deposits' are not mutually exclusive terms inasmuch as (i) both are debts repayable (ii) in both the cases, money passes from one hand to another, (iii)in both the cases, there is r....