Madras High Court
The Commissioner Of Income Tax I vs M/S Bank Of Madura Ltd on 10 January, 2022
T.C.A.No.1339 of 2009
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.01.2022
CORAM :
THE HON'BLE MR. JUSTICE R. MAHADEVAN
AND
THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ
T.C.A.No.1339 of 2009
The Commissioner of Income Tax I,
Chennai. ... Appellant
Versus
M/s Bank of Madura Ltd.,
(Now merged with ICICI Ltd)
4th Floor, West Wing
93 Santhome High Road,
Chennai 600 028. ... Respondent
Appeal preferred under Section 260A of the Income Tax Act, 1961,
against the order of the Income Tax Appellate Tribunal, Chennai, “D”
Bench, dated 26.06.2009 in I.TA.No.19/Mds/2008.
For Appellant : Mr.T.Ravikumar,
Senior Standing Counsel
For Respondent : Mr.Subbaraya Aiyar
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T.C.A.No.1339 of 2009
JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
We have heard Mr.T. Ravi Kumar, learned Senior Standing Counsel
appearing for the Revenue and Mr. Subbaraya Aiyar, learned counsel
appearing for the assessee and also perused the materials placed before this
court.
2.This tax case appeal has been filed by the appellant / Revenue,
challenging the order dated 26.06.2009 passed by the Income Tax Appellate
Tribunal, Chennai 'D' Bench, in I.T.A.No.19/Mds/2008, relating to the
assessment year 2000-01.
3.By order dated 07.12.2009, this court admitted the aforesaid tax case
appeal on the following substantial question of law:
“Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in holding
that the additional factoring charges received on overdue bills
of exchange are not liable to interest tax?"
4.The facts leading to the filing of this appeal would run thus:
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T.C.A.No.1339 of 2009
The respondent/assessee filed return of income for the assessment year
2000-01 declaring a total chargeable interest of Rs. 1,28,07,45,340/-,
excluding the overdue interest collected to the tune of Rs.6,98,25,253/- in
view of the decision of the Kerala High Court in 228 ITR 40. The Assessing
Officer did not agree with the claim so made by the assessee and relying on
the decision of the Karanakata High Court in 175 ITR 607, which held that
“any amount collected by the Bank for delayed payment of bills could not be
anything but interest, irrespective of the nomenclature, for the purpose of
Interest tax Act, 1974”, included the said amount in the chargeable interest.
Challenging the said order of assessment, the assessee appealed to the
Commissioner of Income Tax (Appeals), who allowed the said appeal.
Aggrieved by the said order, the Revenue filed an appeal before the Income
Tax Appellate Tribunal, which confirmed the order passed by the Appellate
Authority and dismissed the Revenue's appeal. Therefore, this tax case
appeal by the Revenue.
5.The issue raised in this appeal was covered against the Revenue as
per the decision of a Division Bench of this Court in Commissioner of
Income Tax v. Sundaram Finance Ltd. [T.C.(A) Nos.1147 and 1148 of 2006,
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T.C.A.No.1339 of 2009
dated 20.7.2012]. For better understanding, the relevant portion of the said
decision is extracted below:
“.... (1) 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 (2008) 296 ITR 601 (Commissioner of
Income Tax v. Cholamandalam Investment & Finance
Co., Ltd.,) which in turn followed the decision of the
Kerala High Court reported in (1997) 228 ITR 40
(Commissioner of Income Tax v. State Bank of
Travancore) 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. The 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 the Revenue's appeal at the admission
stage, following the decision in T.C.No.73 of 2000
(Commissioner of Income Tax v. M/s.Harita Finance
Ltd., Madras). Going by the said decision, we answer the
question of law in favour of the assessee and thereby
confirm the order of the Tribunal. Accordingly, the tax
case appeals are dismissed. No costs.”
6.In the light of the aforesaid decision, TC(A) Nos.1207 and 1208 of
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T.C.A.No.1339 of 2009
2007 filed by the Revenue against the assessee / ICICI Bank Ltd, were
dismissed by a co-ordinate bench of this court, by judgment dated
10.02.2015.
7.The learned counsel appearing for both sides in unison submitted
that the aforesaid decisions of this court are applicable to the facts of the
present case.
8.In view of the proposition of law enunciated in the decisions,
referred supra, this appeal is dismissed answering the question of law against
the revenue and in favour of the assessee. No costs.
(R.M.D., J.) (M.S.Q., J.)
10.01.2022
av
Internet : Yes
Index : Yes / No
R. MAHADEVAN, J.
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T.C.A.No.1339 of 2009
and
MOHAMMED SHAFFIQ, J.
av
To
1. The Income Tax Appellate Tribunal,
Chennai “D” Bench.
2. The Commissioner of Income Tax I,
Chennai.
T.C.A.No.1339 of 2009
10.01.2022
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