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Documents citing Unit Trust Of India And Anr. vs P.K. Unny And Ors. on 19 April, 2001

Commissioner Of Income Tax vs M/S Haryana Financial Corporation on 26 May, 2011

"As stated in our judgment in the case of Unit Trust of India v. P.K. Unny (2001) 249 ITR 612 (Bom), the Interest-tax Act was enacted as an anti-inflationary measure and also to augment revenues. The Act has been brought into force in 1974 and, thereafter, it was intermittently dropped and revived. The Act was meant to discourage borrowings. Between the period 1974 to 1992 interest rates in India were centrally administered. However, after 1992, interest rates are decided by market forces. Even the Government was required to borrow at market rates. After 1992-93, the Government is the biggest borrower. Therefore, the Interest-tax Act is in force intermittently. Under section 26C of the Interest-tax Act, the lender is empowered to modify the terms of the loan agreement so as to pass the burden to the borrower which itself shows that the Act applies strictly to loans and advances and not to investments. Section 26C also indicates that the Interest-tax Act is a special tax. That, it provides for an indirect levy on the Interest Tax Appeal No. 1 of 2006 -11- borrowers. That, if the argument of the Department was to be accepted, the object of the Act would fail because whenever the bank subscribes to Government securities, the borrower is the Government and if the Act is applicable, under section 26C the lender would insist on the Government paying interest-tax which would not only defeat anti-inflationary measure but, it would also decrease the Government revenues. Therefore, one has to keep in mind the object and the scheme of the Act while interpreting section 26C of the Interest-tax Act. The difference between loan and investments is well known in a commercial sense, accounting sense and also under the Companies Act (see sections 370 and 372). It is also borne out by Section 13(1)(d) and Section 11(5) of the Income-tax Act. It is also borne out by Section 2(28A) of the Income-tax Act and Section 2(7) of the Interest-tax Act. Therefore, we hold that the Interest-tax Act will not apply to interest received by the assessee-bank on securities/debentures held by the assessee under the category "permanent".
Punjab-Haryana High Court Cites 23 - Cited by 1 - A K Mittal - Full Document

Andhra Bank vs Deputy Commissioner Of Income-Tax on 5 February, 2002

In the case of Unit Trust of India v. P. K. Unny , a Division Bench of the Bombay High Court considered whether the interest received by the UTT is exempt from tax under the provisions of the Interest-tax Act, 1974. The said issue was considered when the Department issued reassessment notices under Section 10(a) of the Act. The case of the UTT was that basing on the interpretation given by the Central Board of Direct Taxes (the CBDT), the UTI did not file its returns under the provisions of the Interest-tax Act. In fact the communication given by the Central Board of Direct Taxes was based on a circular issued by it, which was subsequently withdrawn. The Bombay High Court held against the Department holding that the burden is on the Department to show on what basis the said communication of the Central Board of Direct Taxes dated October 11, 1991, came to be implemented by the Department for nine years and the said burden was not discharged. Therefore, the Department was estopped from raising an argument contrary to the said circular. Holding so the reassessment notices were set aside. Though the issue considered in this case relates to the Interest-tax Act, but the issue is not in any way connected with the issue in question in the present writ petition.
Andhra HC (Pre-Telangana) Cites 55 - Cited by 0 - Full Document

Commissioner Of Income-Tax vs United Western Bank Ltd. on 4 December, 2002

8. As stated in our judgment in the case of Unit Trust of India v. P. K. Unny [2001] 249 ITR 512 (Bom), the Interest-tax Act was enacted as an anti-inflationary measure and also to augment revenues. The Act has been brought into force in 1974 and, thereafter, it was intermittently dropped and revived. The Act was meant to discourage borrowings. Between the period 1974 to 1992 interest rates in India were centrally administered. However, after 1992, interest rates are decided by market forces. Even the Government was required to borrow at market rates. After 1992-93, the Government is the biggest borrower. Therefore, the Interest-tax Act is in force intermittently. Under Section 26C of the Interest-tax Act, the lender is empowered to modify the terms of the loan agreement so as to pass the burden on to the borrower which itself shows that the Act applies strictly to loans and advances and not to invest-
Bombay High Court Cites 22 - Cited by 20 - S H Kapadia - Full Document

Discount And Finance House Of India Ltd. vs S.K. Bhardwaj, Cit And Ors. on 4 December, 2002

After 1992, one of the biggest market borrowers is the Government. Therefore, the Act has been operating intermittently depending upon the economy of the country. This has been discussed in the judgment of the Division Bench of this court to which one of us (S. H. KAPADIA J.) is a party in the case of Unit Trust of India v. P. K. Unny [2001] 249 ITR 612 (Bom). Therefore, the Act is enacted for twofold purposes, namely, as an anti-inflationary measure and, secondly, to augment the revenue. In the said judgment of the Division Bench of this court in the case of Unit Trust of India [2001] 249 ITR 612, it has been held that interest-tax is a special tax. It operates as an indirect levy on the borrower. This is indicated by Section 26C of the Act which lays down that a lender can modify the existing agreement so as to pass on the burden of interest-tax to the borrower. Therefore, keeping in mind the object and the scheme of the Act we have to interpret Section 2(7) of the Interest-tax Act, 1974, which defines "interest" to mean interest on loans and advances including commitment charges, discount on promissory notes but excluding discount on treasury bills. If one reads Section 2(7) of the Act, it is clear that an instrument which passes on the burden of interest-tax to the borrower is excluded from the definition of the word "interest" in Section 2(7) like in the case of discount on treasury bills because, in such cases, the Government is the borrower. Further, loans and advances, as a concept, are different and distinct from investments in the commercial sense as also in the accounting sense as also under Sections 370 and 372 of the Companies Act as also under Section 29 read with Schedule III of the Banking Regulation Act, 1949, as also under Section 13(1)(d) and Section 11(5) of the Income-tax Act. Similarly, the definition of the word "interest" in Section 2(28A) of the Income-tax Act vis-a-vis Section 2(7) brings out the difference between lending on the one hand and investment on the other hand. Therefore, one has to read Section 2(7) in the context of the scheme of the Act and, if so read, it is clear that gross interest on Dated Government Securities received by the petitioner from the RBI amounting to Rs. 15,69,41,050 cannot fall under Section 2(7) of the Interest-tax Act.
Bombay High Court Cites 26 - Cited by 22 - S H Kapadia - Full Document

Basf (India) Ltd. And Anr. vs W. Hasan, Commissioner Of Income-Tax ... on 28 October, 2005

26. In the above view of the matter, the first question which needs consideration is : which of the two circulars would be applicable to the refund application of the petitioners dated February 6, 2000. Before taking this issue for consideration, it is necessary to first consider whether the circulars issued by the Central Board of Direct Taxes can operate with retrospective effect. This Court in the case of Unit Trust of India v. P.K. Unny , to which one of us (Daga, J.) is a party, observed (page 661) :
Bombay High Court Cites 25 - Cited by 23 - V C Daga - Full Document

Wipro Limited And Anr. vs State Of Maharashtra And Ors. on 16 July, 2003

12. In addition to the above, it is pertinent to note that the five circulars referred to in the impugned circular dated February 1, 2000 and which were purportedly clarified by the said circular were issued by way of Government policy decision and the administrative concessions granted by these circulars, more particularly the circular dated February 13, 1978 and the circular dated June 21, 1978 were never withdrawn. They were in force even after the impugned circular dated February 1, 2000 was issued. The impugned circular attempts to give clarifications but in the process proceeds to withdraw the concessions retrospectively from July 1, 1981. Such a course of action is not permissible in view of the law laid down by the apex Court in Godfrey Philips India Limited . At the same time, the impugned circular by no stretch of imagination could be termed as translation of the Government decision. The clarifications have been issued by respondent No. 2 and he could not have proceeded to alter the Government policy under the garb of setting-out the clarifications of the administrative concessions granted by the State Government. Any alteration in the policy of administrative concessions could be done by the State Government alone and the impugned circular is not and cannot be called as a government decision. Therefore, at the threshold the impugned circular is required to be declared invalid as having been issued without competence on the part of the respondent No. 2. An administrative clarification cannot be allowed to alter a Government policy and if the Government policy is required to be changed, such a change must necessarily be done by the State Government only and not by the department concerned. The entrepreneurs having enjoyed the concessions on the basis of the said policy did alter their position and enjoyed the benefits of such concessions. In the case of the present petitioners, the order passed by the Tribunal on December 21, 1996 in Appeal No. 727 of 1989 came to be implemented by the Assistant Commissioner of Sales Tax by his order dated April 20, 2000 on the basis of circular No. 2 of February 13, 1978 and the purchase tax liability was reduced almost to one-third. The impugned administrative circular was in fact void ab initio and it was not required to be considered while deciding the pending appeals pursuant to the directions issued by this Court in Writ Petition No. 5034 of 1999 and they were required to be decided by following the law laid down by the Tribunal in Second Appeal No. 727 of 1989.
Bombay High Court Cites 14 - Cited by 0 - B H Marlapalle - Full Document

Vtm Ltd., Virudhunagar vs Assessee on 20 April, 2010

6. Per contra, the ld. AR submitted that the AO had indeed examined the claim made by the assessee that no part of the payment of commission 4 ITA.1209&CO.70/Mds/10 made to the non-resident were chargeable to tax in India. But he nevertheless made disallowance under sec. 40(a) of the Act without properly appreciating the submissions of the assessee. According to the ld. AR, Circular No.23 dated 23-07-1969 read along with Circular No.786 dated 07-02-2000 would clearly go to show that payment of commission to non-resident agents, where such non-resident agents operated outside the country, would not be liable for deduction of tax under Sec. 195 of the Act. According to ld. AR, Circular No.7 dated 22-10-2009 withdrawing the above mentioned earlier Circulars, had effect only from that date and would not act retrospectively. For this proposition, reliance was placed on the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Prasad Productions P. Ltd. (179 ITR 147), Hon'ble Bombay High Court in the case of Unit Trust of India v. P.K.Unny (249 ITR 612) and BASF (India) Ltd.& Another vs. W. Hasan, CIT (280 ITR 136).
Income Tax Appellate Tribunal - Chennai Cites 20 - Cited by 0 - Full Document

Commissioner Of Income Tax vs Vijaya Bank [Alongwith It Ref. Case Nos. ... on 23 September, 2005

In the said judgment of the Division Bench of this Court in the case of Unit Trust of India v. P.K. Unny, ITO , it has been held that interest-tax is a special tax. It operates as an indirect levy on the borrower. This is indicated by Section 26C of the Act which lays down that a lender can modify the existing agreement so as to pass on the burden of interest-tax to the borrower. Therefore, keeping in mind the object and the scheme of the Act we have to interpret Section 2(7) of the Interest-tax Act, 1974, which defines 'interest' to mean interest on loans and advances including commitment charges, discount on promissory notes but excluding discount on treasury bills. If one reads Section 2(7) of the Act, it is clear that an instrument which passes on the burden of interest-tax to the borrower is excluded from the definition of the word 'interest' in Section 2(7) like in the case of discount on treasury bills because, in such cases, the Government is the borrower. Further, loans and advances as a concept are different and distinct from investments in the commercial sense as also in the accounting sense as also under ss. 370 and 372 of the Companies Act as also under Section 29 r/w Sch. III of the Banking Regulation Act, 1949, as also under Section 13(l)(d) and Section 11(5) of the IT Act. Similarly, the definition of the word 'interest' in Section 2(28A) of the IT Act vis-a-vis Section 2(7) brings out the difference between lending on the one hand and investment on the other hand. Therefore, one has to read Section 2(7) in the context of the scheme of the Act and, if so read, it is clear that gross interest on Dated Government Securities received by the petitioner from the RBI amounting to Rs. 15,69,41,050 cannot fall under Section 2(7) of the Interest-tax Act."
Karnataka High Court Cites 39 - Cited by 18 - Full Document
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