AJAY KUMAR MITTAL, J. - (1.) THIS appeal has been filed by the Revenue under S. 21 of the Interest-tax Act, 1974 (in short "1974 Act") read with S. 260A of the IT Act, 1961 (hereinafter referred to as "the Act") against the order dt. 31st March, 2005 passed by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (for short "the Tribunal") in Interest-tax Appeal No. 7/Chd/2002, relating to the asst. yr. 1998-99.
(2.) THE appeal was admitted by this Court vide order dt. 20th Nov., 2007 for determination of the following substantial question of law : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Revenue authorities were not justified in including the sum of Rs. 1,99,89,630 being interest-tax recovered from the customers as chargeable to interest-tax ?" Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee is a credit institution earning interest and filed its return of chargeable interest on 30th Nov., 1998 declaring total chargeable interest at Rs. 99,94,82,400. The assessee had not included the interest-tax amounting to Rs. 1,99,89,630 collected from its clients in the chargeable interest. The AO vide order dt. 23rd Jan., 2001 completed the assessment under S. 8(2) of the 1974 Act while adding the said amount of Rs. 1,99,89,630 to the chargeable interest in view of provisions of S. 26C of the 1974 Act. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) [in short "the CIT(A)"]. The CIT(A) vide order dt. 16th April, 2002 upheld the order of the AO and dismissed the appeal. Dissatisfied with that, the assessee approached the Tribunal who vide order dt. 31st March, 2005 allowed the appeal holding that the amount of Rs. 1,99,89,630 being interest-tax recovered from the customers was not chargeable to interest-tax. Hence, the present appeal by the Revenue.
(3.) WE have heard learned counsel for the parties and have perused the record with their assistance.;