Commissioner of Income Tax vs Kallur Chit Funds and Finance (P) Ltd.

C.N. Ramachandran Nair, J.—Heard standing counsel appearing for the appellant and counsel appearing for the respondent-assessee. The first issue that is, liability for interest-tax on finance charges recovered by hire purchase company is covered in favour of the revenue by decision of this Court in Commissioner of Income Tax Vs. Kerala State Financial Enterprises Ltd. and Others, . Following the said judgment, we reverse the order of the Tribunal and restore the assessment under Interest Tax Act on the hire-charges and finance charges recovered by the respondent. So far as the next contention i.e. departments claim for assessment of interest received from default subscribers is concerned, we do not think the claim is tenable because interest taxable under the Act is only interest received on loans and advances made in India. Subscriber is liable to pay interest on account of non-payment of the kurry subscription in time. So far as the kurry subscriptions are riot in the nature of loans or advances, no interest-tax is payable on the interest payable for the belated payment of subscription. Appeal is, therefore, allowed in part with direction to the assessing authority to revise the assessment as indicated above.