2003 (4) TMI 51

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....terest amounting to Rs. 17.39 crores. It claimed deduction to the extent of rediscounting charges paid to the IDBI and other credit institutions under the rediscounting/refinancing scheme. This was disallowed by the Income-tax Officer, inter alia, on the ground that under section 5 of the Interest-tax Act, the rediscounting charges/refinancing charges constituted interest and since under section 5 of that Act, the gross receipt of interest is chargeable to tax, the assessee-bank was not entitled to claim deduction for rediscounting charges paid by the Bank of Maharashtra to the IDBI. Being aggrieved, the assessee-bank carried the matter in appeal to the Commissioner of Income-tax (Appeals) on the ground that while computing the chargeable i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....attention was invited to section 5 of the Interest-tax Act, 1974. It was argued that under section 5 of the Interest-tax Act, the scope of chargeable interest has been defined and the expression "chargeable interest" of any previous year of a credit institution has to be the total amount of interest accruing or arising to the credit institution in that previous year. Mr. Desai contended that under the above circumstances, interest and discount paid to the participating financial institutions did not constitute deduction under the Act. He submitted that the total amount of interest and discount received by the Bank of Maharashtra from its borrowers constituted chargeable interest under section 5 of the Interest-tax Act and, therefore, the As....