Interest income on trade advance given by a credit institution towards purchase of machinery for which the delivery is delayed, is not covered under the definition of ‘interest’ as defined u/s 2(5A)

CIT Vs M/s Integrated Finance Co. Ltd. (Madras High Court)- The assessee is a credit institution. As a finance company engaged in hire purchase and leasing transaction, the assessee also does not deny that its activities in respect of financing, falls for consideration under sub clause (iv). The Assessing Officer has assessed the transactions relating to hire purchase financing.

However, as rightly pointed out by the assessee, when the payment of money as advance was towards the

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