COMMISSIONER OF INCOME TAX Vs. RAM INVESTMENT LTD

JUDGEMENT

(1.) AGAINST the order of the Appellate Tribunal in ita. No. 98/mds/1999, dated 18. 3. 2005, the Revenue has preferred the appeal and raised the following substantial questions of law: (1) Whether in the facts and circumstances of the case, the tribunal was right in holding that hire purchase finance charges are not subject to interest tax, without going into the nature of the financial transactions? (2) Whether in the facts and circumstances of the case, the Tribunal was right in holding that interest from Government securities is not subject to interest tax?

(2.) THE Revenue is the appellant. THE assessment year involved in the appeal is 1996-97. THE assessee claimed deduction on hire purchase finance charges and interest received on Kisan Vikas Pathras. THE assessing officer held that finance charges relating to hire purchase contracts and the interest earned from Government securities would be subject to interest tax. On appeal by the assessee, the Commissioner of Income-tax (Appeals) decided the issues in favour of the assessee, which was confirmed by the Appellate tribunal on appeal filed by the Revenue. Hence, the Revenue has come forward with this appeal.

(3.) FOLLOWING the abovesaid proposition of law, we hold that the Appellate Tribunal was right in holding that interest from Government securities is not subject to interest-tax. Accordingly, the second question is also answered in the affirmative, against the Revenue and in favour of the assessee. The appeal is dismissed. No costs. .