Interest Tax Act, 1974

The State Bank of Patiala discounted bills of exchange and, when the drawee defaulted, levied a daily overdue charge as compensation. The revenue argued that this charge constituted "interest" under Section 2(7) of the Interest Tax Act, 1974 and was therefore taxable, while the bank contended it was merely compensation…

The Supreme Court examined whether banks could round up the rate of interest on loans to the next 0.25% under Section 26C of the Interest Tax Act, 1974, thereby increasing the tax burden on borrowers. The Court held that Section 26C is merely an enabling provision to allow banks to recover the tax on chargeable interes…

The Revenue appealed against the Bombay High Court's order upholding the Income Tax Appellate Tribunal's view that interest earned by Ratnakar Bank Ltd. on government securities was not chargeable to tax under Section 2(7) of the Interest Tax Act, 1974. The Supreme Court examined whether such interest falls within the …

The Revenue appealed against the Bombay High Court’s order upholding the Tribunal’s view that interest earned by ICICI Bank on government securities was not taxable under section 2(7) of the Interest Tax Act, 1974. The Supreme Court examined whether the interest in question fell within the definition of "interest charg…

The Commissioner of Income Tax appealed against the Bombay High Court's order upholding the Tribunal's view that interest earned by the Industrial Development Bank of India Ltd. on government securities was not assessable under Section 2(7) of the Interest Tax Act, 1974. The Supreme Court examined whether the interest …

The Supreme Court examined an appeal by the Commissioner of Income Tax challenging the High Court's affirmation that interest earned by City Union Bank on government securities was not assessable under section 2(7) of the Interest Tax Act, 1974. The Tribunal and the High Court had held the interest non‑taxable, relying…

Muthoot Leasing and Finance Ltd and another, classified as credit institutions, challenged the levy of interest tax on the interest component embedded in hire‑purchase instalments under the Interest‑Tax Act, 1974. The Income Tax Appellate Tribunal (ITAT) held that hire‑purchase agreements are composite transactions wit…