2018 (12) TMI 1518

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....2006 in ITA Nos.86,87,52,53,95,96/Mds/2002, for the Assessment years 1999-2000, 2000-01, 1999-00, 2000-01, 1999-00, 2000-01 respectively and therefore, they are clubbed together on account of the common issues involved in this batch of cases. 2. Heard Mr.T.R.Senthil Kumar, learned Counsel for the Revenue and Mr.R.Sivaraman, the learned Counsel for the respondent. 3.All these Appeals have been admitted on 05.08.2008, on the following two Substantial Questions of Law: "1.Whether in the facts and in the circumstances of the case, the Tribunal was right in law in holding that the "minimum guarantee charges" received by the assessee from companies to whom "financial assistance" is given is not 'interest' chargeable to Inte....

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.... (b) discount on promissory notes and bills of exchange drawn or made in India, but does not include- (i) interest referred to in sub-section (1B) of Section 42 of the Reserve Bank of India Act, 1934 (2 of 1934); (ii) discount on treasury bills;" 10.In terms of the "definition" of interest as defined in Section 2(7) of the Interest Tax Act, it means interest on loans and advances made in India. It includes two other categories and excludes two other categories. But, in these appeals, we are not constrained about such inclusion or exclusion, as it is the case of the Revenue that the charges collected by the assessee would fall within the inclusive definition of interest under Section 2(7) of the In....

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....ces alone is taxable under the Interest-tax Act and the character of an overdue bill is not synonymous with loans and advances and therefore, the interest on overdue bills is to be excluded from chargeable interest under the Interest-tax act. 4. Applying the above ratio to the facts of the case, we hold that the Interest-tax Act is attracted only in respect of interest on loans and advances and the additional discount charges which is an amount given as a premium, would not attract the provisions of the Interest-tax act. The Tribunal is therefore correct in excluding additional discount charges from the chargeable interest under the Interest-tax Act." 13.In the case of Commissioner of Incometax vs. Bank of Rajasthan Ltd. [....

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....e view of the High Court of Karnataka in the case of State Bank of Mysore (supra) is directly in conflict with the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax vs. Sahara India Savings & Investment Corpn. Ltd. [2009] 17 SCC 43 and therefore, held that a contrary view cannot be countenanced. 17.It was further pointed out that "loans and advances" has been held to be different from discounts and legislature has kept in mind the difference between the two and it is clear that the right to charge for overdue interest by the assessee banks did not arise on account of any delay in repayment of any loan or advance made by the said banks and this right arose on account of default in payment of amounts....