ZUARI FINANCELTD. Vs. THE ASSISTANTCOMMISSIONER OF INCOMETAX

JUDGEMENT

(1.) ASSESSEE is before this Court in these three appeals under Section 260 -A of Income Tax Act challenging the demand under Interest Tax Act, 1974 under Section 8(2) thereof read with Rule 7 of Interest Tax Rules, 1974. The demand is for three years i.e. assessment years 1996 -97, 1997 -98 and 1998 -99. ITA has passed a common order and as against said common order, three appeals have been preferred before this Court. The appeals have been admitted on 9/07/2007 with following questions as substantial questions of law:

(2.) ADVOCATE Shri Nadkarni has invited attention of Court to the consideration of the question of applicability of Interest Tax Act, 1974 in case of appellant in paragraph 3.6 onwards of its order by CIT appeals. He points out the relevant provisions of Interest Tax Act, 1974 to submit that in order to reject the contention of appellant about the "principal" nature of business carried by it, CIT appeals relies upon provisions of Section 2(5B)(vi) by pointing out that clause (va) thereof does not use the word "principal business". He contends that question whether business of appellant falls under said clause (va) has not been gone into at all and straight away clause (vi) has been made applicable. He also points out the allowance made for hire purchase income and interest received from other credit institutions by CIT appeals. He submits that application of mind in paragraph 3.8 and 3.8.1 of its order by CIT appeals again overlooks the ingredients of clause (va) mentioned supra. He contends that the admitted accounts of appellant for the relevant years show that 59.49%, 50.80% and 51.44 % income, respectively, during above assessment years has been earned out of consultancy charges. Some income has come from lease rentals. He contends that interest derived under the head 'hire purchase income' and 'interest income during these three years' has been roughly varying between 25% to 46%. The said income never formed a principal source and, therefore, was not a principal business. He further contends that when all these contentions were pressed into service in further appeals before ITAT, ITAT has in paragraph 15 rejected the same simply by affirming the findings of CIT appeals without any application of mind.

(3.) QUESTIONS which fall for determination have been already mentioned by us supra. The question 4(D) specifically speaks of the absence of appropriate reasons or casual approach by ITAT. In the light of arguments advanced, we find it necessary to restrict the present consideration only to said question.