Case Law Details
1. Briefly, in the facts of the case, the assessee had filed the return of income declaring total income of Rs.2,31 ,61 ,482/-. The case of the assessee was taken up for scrutiny. The Assessing Officer during the course of assessment proceedings noted that the assessee had claimed deduction of Rs.16,97,027/- towards broken period interest. The assessee was show caused to explain why the same should be allowed. The show cause notice issued by the Assessing Officer and the submissions of assessee are reproduced in the assessment order. However, the Assessing Officer held that the assessee was not eligible for broken period interest in respect of securities purchased during the previous year by the bank for the reason that such expenditure was laid out as capital outlay. Therefore, any interest element included in the purchase consideration was not allowable as expenditure against income accruing in those securities. Reliance was placed on the ratio laid down by the Hon’ble Supreme Court in Vijaya Bank Vs. CIT reported in 187 ITR 541 (SC) and he Hon ble Hgh Court of Rajasthan in CIT Vs. Bank of Rajasthan Ltd. (2009) 178 Taxman 304 (Raj).
2. The CIT(A) upheld the order of Assessing Officer and The assessee is in appeal against the order of CIT(A).
3. Similar issue arose before the Tribunal in assessees own case relating to assessment year 2010-11. The Tribunal relied on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd reported in 366 ITR 505 (Bom), which in turn had relied on the ratio laid down by he Hon ble Bombay High Court in American Express International Banking Corporation Vs. CIT reported in 258 ITR 601 (Bom), which in turn, had distinguished the ratio laid down by the Hon’ble Supreme Court in Vijaya Bank Vs. CIT (supra) and the Hon’ble High Court of Rajasthan In CIT Vs. Bank Rajasthan Ltd (supra) and had held that broken period interest is allowable as deduction. Following the same parity of reasoning, we hold that the assessee is entitled to the claim of broken period interest of Rs.16,97,027/-. The ground of appeal No.1 raised by the assessee is thus, allowed.
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Author Bio
I am retired 68 yrs. old and provide marketing consultancy services ( resident representative) to one Germany based company industrial testing & inspection services providing company . I get commission based on Work Orders generated in India. Am I liable to pay Service Tax under GST ? if yes how much? Thanks & Regards