2015 (10) TMI 819

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....2,28,420/- on investments in corporate bonds, fell within the scope of the definition of 'interest' in Section 2(7) of the Interest Tax Act, 1974 ?" 2. Heard Mr.Farrokh V.Irani, learned counsel appearing for the assessee and Mrs.R.Hemalatha, learned Standing Counsel for the Income Tax Department. 3. During the relevant previous year ended 31st March 2000, the appellant, which is engaged in the business of providing long term finance to enterprises engaged in developing, maintaining and operating infrastructural facilities, invested its surplus funds/idle funds in various corporate bonds and earned interest to the tune of Rs. 2,52,28,420/-. In the return of interest tax filed for the relevant assessment year, the assessee claim....

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....ase of debentures would constitute an investment made in accordance with the Banking Regulations Act. In as much as an investment cannot be termed either as a loan or as an advance in terms of Section 2(7) of the Act, this Court held that the interest on debentures would not be interest on securities. 7. In Commissioner of Income Tax Vs. Indian Overseas Bank decided on 24.10.2005 [T.C.A.Nos.695 and 696 of 2005], one of the questions of law raised before a Bench of this Court was as to whether interest on Government electricity bonds, interest on securities and interest on debentures would come within the meaning of the expression 'interest' under Section 2(7) of the Act. While answering the said question in favour of the assessee....

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.... Deputy Commissioner of Income Tax [(2005) 95 ITD 356]. But in the said case, the Tribunal was concerned with an inter corporate deposit governed by Section 370(1) of the Companies Act read with Sections 58A and 227(1A)(d) of the Act. Therefore, the said decision is of no application to the facts of this case. In any event, we have the decisions of two Division Benches of this Court and two Benches of the Bombay High Court, all of which indirectly received the seal of approval from the Supreme Court in Sahara India Savings and Investment Corporation Limited. 11. Mrs.R.Hemalatha, learned Standing Counsel appearing for the Department made a valiant attempt to contend that the Interest Tax Act, 1974 defined the expression 'interest'....