Commissioner of Income-tax, Chennai v. ICICI Bank Ltd. (Erstwhile Bank of Madura Ltd.) - 2015-LL-0210-15

Citation	2015-LL-0210-15
Appellant Name	Commissioner of Income-tax, Chennai
Respondent Name	ICICI Bank Ltd. (Erstwhile Bank of Madura Ltd.)
Court	HIGH COURT OF MADRAS
Relevant Act	Income-tax
Date of Order	10/02/2015
Assessment Year	1998-99
Judgment	View Judgment
Keyword Tags	interest tax
Bot Summary:	194 and 195/2003 for the the assessment years 1998-1999 and 1999-2000 and the same were admitted on the following question of law: Whether the Tribunal was right in holding that additional factoring charges received on overdue bills of exchange are not liable to interest tax 2.1. The facts in a nutshell are as under: The respondent/assessee filed return of income for the assessment years 1998-1999 and 1999-2000 admitting chargeable interest of Rs.1,19,42,07,610/- and 1,07,33,79,181/- respectively, excluding the overdue interest on unpaid matured bills. The said plea of the assessee did not find favour with the Assessing Officer, who levied interest tax on the additional factoring charges levied. The Tribunal allowed the appeals of the assessee holding that the character of an overdue bill is not synonymous with loans and advances and interest on overdue bills is to be excluded from chargeable interest under the Interest Tax Act. The issue raised in the said decision and the finding of the Division Bench are extracted hereunder for better understanding of the issue: .... Whether in the facts and circumstances of the case, the Tribunal was right in holding that additional factoring charges amounting to received on overdue bills of exchange are not liable to interest tax ... 3. As far as the first question of law is concerned, the said issue is covered by the decision of this Court reported in 296 ITR 601 which in turn followed the decision of the Kerala High Court reported in 228 ITR 40 holding that the character of an overdue bill is wholly distinct from loans and the advances and the interest on the loans and advances alone would be taxable under the Interest Tax Act. So far as the present case is concerned, the Tribunal followed its earlier order relating to the assessee's own case made in Int.T.A.108/2000 granting th relief to the assessee on additional factoring charges.

IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.2.2015 CORAM HON'BLE MR.JUSTICE R.SUDHAKAR AND HON'BLE MR.JUSTICE R.KARUPPIAH T.C.(A).Nos.1207 and 1208 of 2007 Commissioner of Income Tax Chennai. .. Appellant Vs. ICICI Bank Ltd. (Erstwhile Bank of Madura Ltd.) Karamuthu Nilayam 192, Anna Alai Chennai 600 002. .. Respondent PRAYER: Appeals under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'A' Bench, Chennai, dated 27.10.2006 made in Int.T.A.No.194 and 195 (Mds)/2003 for the assessment years 1998-1999 and 1999-2000. For Appellant : Mr.T.Ravi Kumar Sr. Standing Counsel For Respondent : Mr.Venkat Narayanan for M/s.Subbaraya Aiyar JUDGMENT (Delivered by R.SUDHAKAR, J.) Revenue has filed these appeals assailing order of Income Tax Appellate Tribunal 'A' Bench, Chennai, dated 27.10.2006 made in Int.T.A.No.194 and 195 (Mds)/2003 for the assessment years 1998-1999 and 1999-2000 and same were admitted on following question of law: (2) Whether Tribunal was right in holding that additional factoring charges received on overdue bills of exchange are not liable to interest tax? 2.1. facts in nutshell are as under: respondent/assessee filed return of income for assessment years 1998-1999 and 1999-2000 admitting chargeable interest of Rs.1,19,42,07,610/- and 1,07,33,79,181/- respectively, excluding overdue interest on unpaid matured bills. It was claim of assessee that such amount was not chargeable to interest tax since it is not in nature of chargeable interest as contemplated under Interest Tax Act. said plea of assessee did not find favour with Assessing Officer, who levied interest tax on additional factoring charges levied. 2.2. Challenging said order, assessee appealed to Commissioner of Income Tax (Appeals), who confirmed addition made by Assessing Officer. 2.3. Aggrieved by said order, assessee preferred appeals before Tribunal. Tribunal allowed appeals of assessee holding that character of overdue bill is not synonymous with loans and advances and, therefore, interest on overdue bills is to be excluded from chargeable interest under Interest Tax Act. (3) 2.4. Calling in question said order, Revenue has filed these appeals on questions of law, referred supra. 3. We have heard Mr.T.Ravi Kumar, learned Senior Standing Counsel appearing for Revenue and Mr.Venkat Narayanan, learned counsel appearing for assessee and perused orders passed by Tribunal and authorities below. 4. issue raised in these appeals was considered by Division Bench of this Court in Commissioner of Income Tax v. Sundaram Finance Ltd. [T.C.(A) Nos.1147 and 1148 of 2006, dated 20.7.2012]. issue raised in said decision and finding of Division Bench are extracted hereunder for better understanding of issue: .... (1) Whether in facts and circumstances of case, Tribunal was right in holding that additional factoring charges amounting to received on overdue bills of exchange are not liable to interest tax? ... 3. As far as first question of law is concerned, said issue is covered by decision of this Court reported in (2008) 296 ITR 601 (Commissioner of Income Tax v. Cholamandalam Investment & Finance Co., Ltd.,) which in turn followed decision of Kerala High Court reported in (1997) 228 ITR 40 (Commissioner of Income Tax v. State Bank of Travancore) holding that character of overdue bill is wholly distinct from loans and advances and interest on loans and advances alone would be (4) taxable under Interest Tax Act. So far as present case is concerned, Tribunal followed its earlier order relating to assessee's own case made in Int.T.A.108/2000 granting th relief to assessee on additional factoring charges. said decision came up for consideration in T.C.(A) No.55 of 2006 (Commissioner of Income Tax v. M/s.Sundaram Finance Services Limited) wherein, this court by order dated 1.2.2006 rejected Revenue's appeal at admission stage, following decision in T.C.No.73 of 2000 (Commissioner of Income Tax v. M/s.Harita Finance Ltd., Madras). Going by said decision, we answer question of law in favour of assessee and thereby confirm order of Tribunal. Accordingly, tax case appeals are dismissed. No costs. 5. learned counsel on either side fairly concede above said decision of this Court is applicable on all fours to facts of present case and question of law is to be answered against Revenue and in favour of assessee. In view of proposition of law enunciated in decision, referred supra, these appeals are dismissed answering question of law against revenue and in favour of assessee. No costs. (R.S.J.) (R.K.J.) 10.2.2015 Index : No Internet : Yes sasi (5) To: 1. Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "A", Chennai. 2. Secretary, Central Board of Direct Taxes, New Delhi. 3. Commissioner of Income Tax (Appeals) - III Chennai. 4. Deputy Commissioner of Income Tax Company Circle I (2), Chennai. (6) R.SUDHAKAR,J. and R.KARUPPIAH,J. (sasi) T.C.(A).Nos.1207 and 1208 of 2007 10.2.2015 Commissioner of Income-tax, Chennai v. ICICI Bank Ltd. (Erstwhile Bank of Madura Ltd.)

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