JUDGMENT D.V. Shylendra Kumar , J.—Appeal by the revenue under section 260A of the Income-tax Act 1961 is directed against the order of the Income Tax Appellate Tribunal, Bangalore 'B' Bench, dated 20th January 2006 as per Annexure 'A'. The Tribunal having allowed the appeal of the respondent-assessee and having reversed the assessment order affirmed by the Commissioner of Income-tax (Appeals-I) assessing the assessee for a Liability of sum of Rs. 9,14,891 as payable by way of tax under the provisions of the Interest-Tax Act, 1974 (for short 'the Act') by holding that the assessee does not satisfy the requirements of Section 2(5A) read with Section 2(5B) of the Act and therefore, having set aside the order of the lower authorities, revenue is in appeal and posing for our answer the following substantial question of law: Whether the Tribunal was correct in holding that the assessee is not a credit institution as per Sections 2(5A) and 2(5B) of the Interest Tax Act as the main business activity of the assessee relates to income from leasing, merchant banking, brokerage, interest on security profit on sale of security, interest on investment, dividends on investments profit on sale of investment and interest on loans etc.? 2. Assessee is a Company registered under the Companies Act and even as its name suggests, it is a Company providing financial services under the caption "Canbank Financial Services Limited". For the period relevant for the assessment year 1998-1999 the assessee had filed a return of tax under the provisions of the Act to claim its total chargeable interest as nil on the ground that it is not a 'credit institution' within the meaning of expression as it occurs under section 2(5A) of the Act. 3. The Assessing Officer, who had occasion to look into the return was of the opinion that the taxable interest and the tax thereon is required to be computed as under: 6. Other interest booked by the assessee as per assessee's letter dated 11.10.2000 amounts to Rs. 78.09,904, which consists of the following: (i) Lease finance charges Rs. 28,94,101 (ii) Hire Purchase finance charges Rs. 13,250 (iii) Interest on staff loans Rs. 2,27,536 (iv) Interest on Indira Vikas Patra Rs. 9,40,000 (v) Interest on Income-tax refund Rs. 37,01,194 (vi) Interest on rental value Rs. 33,223 TOTAL Rs. 78,09,904 7. 78.09,904, which consists of the following: (i) Lease finance charges Rs. 28,94,101 (ii) Hire Purchase finance charges Rs. 13,250 (iii) Interest on staff loans Rs. 2,27,536 (iv) Interest on Indira Vikas Patra Rs. 9,40,000 (v) Interest on Income-tax refund Rs. 37,01,194 (vi) Interest on rental value Rs. 33,223 TOTAL Rs. 78,09,904 7. Chargeable Interest is computed as under: (i) Interest portion in leasing finance as per paras4.1 to 4.4 Rs. 3,65,00,000 (ii) Interest on Investments, vide para5 Rs. 6,01,25,026 (iii) Other interest receipts - para6 Rs. 28,09,904 TOTAL Rs. 10,44,34,930" 4. Assessee being aggrieved by this order filed an appeal to the Commissioner of Income-tax (Appeals) and met with part success resulting in the reduction of liability under the Act. However, the assessee being not satisfied with this order and being of the view that it is not at all liable to pay any tax under the provisions of the Act, in respect of its activities, carried the matter further by way of appeal to the Income-tax Appellate Tribunal. 5. The Tribunal in terms of the impugned order has allowed the appeal and has opined that when the assessee was not a credit institution in the nature of a financial Company, to which the provisions of Section 2(5A) of the Act are attracted, there is no liability on the assessee under the provisions of the Act and therefore set aside the order and has exonerated the assessee of any liability under the Act. Therefore, the present appeal by the revenue. 6. We have heard Sri Kamaladhar, learned standing counsel for the Income-tax Department and Sri Suryanarayana, learned counsel appearing for the respondent - Company. 7. Mr. Kamaladhar, learned standing counsel for the revenue has taken us through the orders of the authorities and the Tribunal, and has made very vehement and passionate submission contending that the assessee's activities include leasing transactions and hire charges received from leasing transactions; that such hire charges partake the character of interest received on loan as transaction is virtually one of assessee financing the equipment for the benefit of the assessee or its lessee and therefore, even the rent earned should be taken on par with interest earned from a loan transaction; that the Tribunal has overlooked this aspect of the matter and therefore, the order passed by the Tribunal is not sustainable. 8. Mr. 8. Mr. Kamaladhar also submits that the assessee having styled itself as a "financial services limited" and even in terms of its memorandum of association having shown its main object to be one of equipment leasing and even the second main object being one of carrying on business of merchant banking and all its activities being either in the nature of leasing activity or merchant banking activity and earning from these activities being part of the business income of the assessee, and earning dividend income by way of investments in securities and by way of interest on loan provided to its customers through all such activities, which come within the scope of one or the other activities as indicated in Section 2(5B) of the Act and therefore, the Tribunal has erred in opining that the provisions of the Act are not applicable to the assessee. 9. It is also submitted that from the material made available by the assessee, it could be inferred that it is a loan institution coming within the scope of Section 2(5B) of the Act and the opinion expressed by the Tribunal to the effect that the assessee-company does not qualify under any of the clauses (i) to (v) of Section 2(5B) of the Act is an error in law committed by the Tribunal and amounts to misreading of the provisions of Section 2(5A) and 2(5B) of the Act and therefore, the order of the Tribunal deserves to be set aside. 10. Mr. Kamaladhar, learned standing counsel for the revenue has placed reliance in support of the said submissions on a Division Bench decision of the Delhi High Court reported in the case of Commissioner of Income Tax Vs. Motor and General Finance Ltd., (2010) 327 ITR 530 Delhi to submit that the Delhi High Court in this case had clearly held that a Company essentially dealing with equipment leasing activities is to be understood as a loan Company in the sense, Company advancing loans and charging interest and therefore, the submission that the main activity of the assessee-company being leasing of equipment, the view taken by the Tribunal is not sustainable. 11. Mr. Kamaladhar has also placed reliance on a division Bench decision of this Court in the case of CIT v. Jai Bharath Mills (P.) Ltd. 23rd October 2010 in LT. Appeal No. 1111/2006 connected with I.T.A.Nos. 11. Mr. Kamaladhar has also placed reliance on a division Bench decision of this Court in the case of CIT v. Jai Bharath Mills (P.) Ltd. 23rd October 2010 in LT. Appeal No. 1111/2006 connected with I.T.A.Nos. 1112/2006, 578/2007 and 579/2007, wherein it was held that moneys lent to credit institution qualifies an assessee-company of this nature for liability under the provisions of the Act in the wake of the rulings of the Supreme Court, dwelling upon the provisions of Section 2(5A) and 2(5B) of the Act and therefore submits that the present appeal of the revenue is to be allowed. 12. Mr. Kamaladhar has also brought to our attention the definition of the word 'merchant bank' as indicated in wikipedia, the free encyclopedia. A Merchant Bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant hank also provides advisory on corporate matters to the firms they lend to. and on the basis of such definition, urges that a merchant bank could also be taken to be a financial institution within the scope of the provisions of Section 2(5A) read with Section 2(5B) of the Act. 13. Mr. Kamaladhar has also drawn our alteration in specific to Section 2(5A)(i) of the Act and Section 51 of the Banking Regulation Act, 1949 to submit that assesses-company being a subsidiary of Canara Bank, a scheduled Bank, that it fits into the definition of a credit institution within the meaning of Section 2(5A)(i) of the Act and therefore, the view taken by the Tribunal to exclude assessee-company from the scope of the applicability of the Act for other reasons is neither valid nor justifiable. 14. On the other hand the submission of Sri Suryanarayana, learned counsel for the respondent-assessee is that the scope of charge and the person on whom, the charge is to be fastened, is delineated within the provisions of Sections 4 and 5 read with Section 2(5A) and 2(5B) of the Act, that the assessee-company is not one which fits into either the definition of a 'Credit institution' within the meaning of Section 2(5A) of the Act or a 'Financial Company' within the meaning of Section 2(5B) of the Act and therefore, submits that there is no liability at all on the assessee-company for levy of tax under the provisions of the Act. 15. 15. With reference to the provisions of Section 2(5A) and 2(5B) reading as under 2(5A) "credit institution" means,- (i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in Section 51 of that Act); (ii) a public financial institution as defined in section 4A of the Companies Act, 1956(1 of 1956); (iii) a State Financial Corporation established under section 3 or section 3-A or an institution notified under Section 46 of State Financial Corporations Act, 1951 (63 of 1951); and (iv) any other financial company; 2(5B) "financial company" means a company, other than a company referred to in sub-clauses (i), (ii) or (iii) of clause (5A), being- (i) a hire-purchase finance company, that is to say, a company which carries on, as its principal business, hire-purchase transactions or the financing of such transactions; (ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debenture stock, or securities issued by the Government or a local authority, or other marketable securities of a like nature; (iii) a housing finance company, that is to say, a company which carries on, as its principal business, the business of the financing of acquisition or construction of houses, including acquisition or development of land in connection therewith; (iv) a loan company, that is to say, a company not being a company referred to in sub clauses (i) to (iii) which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise; (v) a mutual benefit finance company, that is to say, a company which carries on, as its principal business, the business of acceptance of deposits from its members and which declared by the Central Government under section 620A of the Companies Act, 1956 (1 of 1956), to be a Nidhi or Mutual Benefit Society; (v-a) a residuary non-banking company [other than a financial company referred to in sub-clauses (i), (ii), (iii), (iv) or (v)], that is to say, a company which receives any deposit under any scheme or arrangement, by whatever name called, in one lump sum or in instalments, by way of contributions or subscriptions or by sale of units or certificates or other instruments or in any other manner; or] (vi) a miscellaneous finance company, that is to say, a company which carries on exclusively, or almost exclusively, two or more classes of business referred to in the preceding sub clauses:] submission of Sri Suryanarayana is that the assessee-company is not a banking Company within the meaning of Section 2(5A)(i) of the Act; that though a subsidiary Company of M/s. Canara Bank, by itself, it is not a banking company. Section 2(5A)(i) of the Act does not apply as this provision of law applies only to a subsidiary bank and not to all subsidiaries of a banking institution. It is consequently urged that even assuming for argument sake that a leasing transaction can be taken within the scope of loan transaction, but not conceding the point, as the view taken by the Delhi High Court has been reversed by the Supreme Court in the case of Motor & General Finance Ltd. v. CIT [2011] 334 ITR 33/200 Taxman 10/12 taxmann.com 23 and the Supreme Court having set aside the judgment rendered by Delhi High Court and the matter having gone back to the High Court and in turn, to the lower forum, the matter is not conclusive one way or the other to hold that a Company carrying on leasing activity is also in the nature of a loan Company and in addition, submits that assuming that it is so, even as per the finding of the Assessing Authority, leasing activity of the assessee constitutes only about 29 per cent of the total business activity of the assessee-company and this activity put together with other qualifying activities even in terms of Section 2(5B) clause (vi) of the Act, the assessee-company does not qualify for the definition of 'credit institution' for the reason that such activities which figure in clauses (i) to (v) put together also does not constitute, the activity, which is exclusively or almost exclusively carried on by the assessee-company and therefore, submits that the view taken by the assessing authority is not sustainable and if the Tribunal has reversed that view, it is justified in law and no interference is warranted. 16. We have bestowed our attention to the submissions made at the bar and perused the orders of the authorities and the Tribunal and have looked into the authorities relied upon at the bar. 17. Under the scheme of the Interest-Tax Act, while the subject matter of charge is interest earned and chargeable interest as indicated in Section 4 of the Act and the scope of the charge is indicated in Section 5 of the Act and it is in respect of chargeable interest of any previous year of a credit institution. 17. Under the scheme of the Interest-Tax Act, while the subject matter of charge is interest earned and chargeable interest as indicated in Section 4 of the Act and the scope of the charge is indicated in Section 5 of the Act and it is in respect of chargeable interest of any previous year of a credit institution. It is because of this nature of charge and scope of the same, the definition of "credit institution" assumes importance and it is to be found either in Section 2(5A) per se or it is a residuary financial company not covered under clauses (i) to (iii) of Section 2(5A) then, it can be anyone of situations coming under clauses (i), (ii), (iii), (iv), (v), (va) or residuary clause (vi) of Section (5B) of Section 2 of the Act. 18. An examination of the present facts vis-a-vis statutory provisions indicate that the assessee-company does not fit into any one of the situations contemplated in clauses (i) to (iii) of sub-section (5A) of Section 2, though Mr. Kamaladhar, learned standing counsel for revenue has sought to bring the assessee-company within Section 2(5A)(i), we are afraid as pointed out by Mr. Suryanarayana, the assessee company does not fit in as it is not a subsidiary-bank of its holding Company, which is a scheduled Bank. 19. The argument that a leasing Company is also to be taken as a loan Company, in our opinion is an argument which may or may not fit in to the definition, as a loan Company is essentially an institution, whose principal business is the activity of providing finance whether by way of loans or advances or otherwise. While one plausible view can be a lease transaction can also be brought within the scope of a loan transaction, it becomes a loan Company only if such activity is the principal business activity of the assessee and not otherwise. 20. In the instant case, it is not in dispute that even as per the revenue, leasing transactions of the assessee constitutes only 29 per cent of the business activity of the assessee-company. 21. Therefore, the assessee-company cannot passibly be brought within the scope of section 2(5B) clause (iv) of the Act. 20. In the instant case, it is not in dispute that even as per the revenue, leasing transactions of the assessee constitutes only 29 per cent of the business activity of the assessee-company. 21. Therefore, the assessee-company cannot passibly be brought within the scope of section 2(5B) clause (iv) of the Act. While the Learned Counsel for the revenue has urged that it can be brought within the scope of section 2(5B)(vi) we find it rather difficult to bring the assessee-company within the scope of this provision also, and as pointed out by Mr. Suryanarayana, even a Miscellaneous Finance Company should have its exclusive or almost exclusive activity in two or more kinds of business referred to in clauses (i), (ii), (iii), (iv), (v) and (va) or (vi) of Section 2(5B) of the Act and even a subsidiary non-banking Company can also be brought within the scope of a Finance Company and it is only subject to fulfilment of the conditions. 22. On facts as revealed from the record, we do not find the assessee-company fulfilling the condition that it is carrying on two or more such financial activities to qualify under clauses (i) to (va) of Section 2(5B) of the Act being the exclusive activity of the assessee-company. This is obvious on perusal of the assessment order, which indicates that different activities from which, the assessee has earned income. 23. In such circumstances we cannot hold that the Tribunal is in error in concluding that the respondent-company is not liable to tax under the Act as it does not fit into the definition of a financial Company within the scope of any of the clauses of sub-section (5B) of Section 2 of the Act. Therefore, we answer the question posed in this appeal in the affirmative and against the revenue and accordingly, dismiss this appeal. Parties left to bear their own respective cost. R.E.I.T.A. NO. 1002/2006 C/W ITA No. 1391/2006 These two appeals by the revenue are also relating to the very assessee as was involved in the above appeal. The question also being the same, arising in respect of a different assessment years, namely, in I.T.A. No. 1002/2006 relating to the assessment year 1993-94 and I.T.A. No. 1391/2006 relating to the assessment year 1997-1998, the question which is common in these appeals is answered as in the above appeal. 24. The question also being the same, arising in respect of a different assessment years, namely, in I.T.A. No. 1002/2006 relating to the assessment year 1993-94 and I.T.A. No. 1391/2006 relating to the assessment year 1997-1998, the question which is common in these appeals is answered as in the above appeal. 24. In ITA No. 1002/2006, though the other question relating to the validity of reopening of the assessment is also involved as the main matter itself has been decided against the revenue, the question relating to reopening of assessments becomes academic and does not survive for an independent answer. 25. In view of our disposal of I.T.A. No. 1003/2006 above and answering the question in favour of the assessee and dismissing the appeal, these two appeals are also dismissed answering the substantial question of law in favour of the respondent assessee and against the appellants revenue.