CIT Vs. SUNDARAM FINANCE LTD.

JUDGEMENT

(1.) THE above tax case appeals are directed against the order of the Tribunal in ITA Nos. 17 and 18/Mad/1997, dated 2 -12 -2003.

(2.) THE revenue is the appellant. The assessment year involved in the appeals are 1993 -94 and 1994 -95. The assessee filed a return of chargeable interest on 30 -11 -1994. While computing the chargeable interest, the assessee had not offered interest of Rs. 5,11,325 received from M/s MacMillan India Ltd., for deposits made with them towards advance for the lands leased to the assessee. In addition, the assessee had derived interest on trade advances totalling a sum of Rs. 45,30,750, which was on account of advances made for procurement of vehicles and the assessee claimed exemption of interest -tax on Government securities, as interest on such securities should be excluded from the total chargeable interest under the Interest -Tax Act. The assessing officer, on the basis of the word 'interest on loans and advances' used in the statute, proceeded to assess interest from the deposits referred to above to tax. On appeal by the assessee, the Commissioner (Appeals) allowed the appeal for the assessment year 1993 -94 and partly allowed the appeal for the assessment year 1994 -95, Hence, the revenue preferred appeals before the Tribunal. The Tribunal, following the decision of this court rendered in CIT v. Lakshmi Vilas Bank Ltd. : [1997]228ITR697(Mad) , dismissed the appeals, holding that the interest on Government securities was not liable for tax.

(3.) IT is fairly submitted by the learned counsel for the revenue that the issue is covered against the revenue by the decision of this court in CIT v. Lakshmi Vilas Bank Ltd. (supra) and the Bombay High Court in Discount and Finance House of India Ltd. v. S.K. Bhardwaj, CIT and Ors. : [2003]259ITR295(Bom) .