1988 (7) TMI 26

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....f chargeable interest ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the subsidy received by the applicant from the Reserve Bank of India in respect of export credit made available by it to its constituents, would fall under the definition of interest under section 2(7) of the Interest-tax Act, 1974, and as such could be included in the chargeable interest under section 5 ?" The first question is referred at the instance of the Revenue and the second question is referred at the instance of the assessee. So far as the answer to the first question is concerned, it is concluded by a decision of this court in ITRC No. 33 of 1981 decided on June 10, 1988 (CIT v. Canara Bank [1989] 1....

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....on of the term "interest" under section 2(7) of the Interest-tax Act, 1974 (hereinafter referred to as "the Act"), interest will only mean and include the amount paid on loans and advances. Clause 2(i) of the Scheme reads as follows : "2. The rate of the subsidy is one and half per cent. per annum and the subsidy is to be payable : (i) in the case of any export credit which is in the form of a loan or advance, on the amount of the loan or advance actually drawn and outstanding from time to time, with periodical rests at the same intervals as for the application of interest by the institution concerned, during the period from the date of the advance or the grant of the credit, as the case may be, to the date on which the export bill....