COMMISSIONER OF INTREST TAX vs. M/S G.E.CAPITAL TRANSPORATION

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 1274/2006 . COMMISSIONER OF INTREST TAX ..... Appellant Through Ms. P.L. Bansal, Advocate. versus . M/S G.E.CAPITAL TRANSPORTATION ..... Respondent Through Mr. M. S. Syali, Sr. Adv. with Mr.Saubhagya Aggarwal and Ms. Mahua C. Kalra, Advocates. . CORAM: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE V. B. GUPTA . O R D E R 28.03.2007 . Admit. The Revenue has raised two issues in this appeal. In so far as the first issue is concerned, it is common ground that a substantial question of law does arise. Therefore, we frame the following substantial question of law:- ?Whether the Income Tax Appellate Tribunal was correct . . ITA 1274/2006 Page 1 of 3 in law in holding that only the net discounting income and not the gross discounting income on Promissory Notes and Bills of Exchange is chargeable to interest tax under the provisions of the Interest Tax Act, 1974?? In so far as the second issue is concerned, we find that the transaction is substantially similar to the transaction that was considered in Commissioner of Interest Tax Vs. M/s. G.E. Capital Transportation, ITA No. 1275/2006 dismissed on 1st September, 2006. The only difference is that in the decided ITA the transaction was a leasing transaction while in the present case the transaction is a hire purchase agreement. Since a hire-purchase agreement is not in the nature of a financing agreement, any interest that the Assessee receives on delayed payment of installments also cannot be said to be interest received on loans or advances made by the Assessee to its customers. Consequently, the second issue urged by learned counsel for the Revenue to the effect that interest received on delayed payment of installments made by the customers of the Assessee is chargeable to ITA 1274/2006 Page 2 of 3 interest tax does not raise any substantial question of law. To this extent, the appeal is dismissed. The Revenue will file the paper books in accordance with the High Court rules in respect of the question earlier framed. . . . MADAN B. LOKUR, J . . . V. B. GUPTA, J MARCH 28, 2007 rs . . . . . . . . ITA 1274/2006 Page 3 of 3 . .