JUDGMENT : K.S. Jhaveri, J. 1. By filing these appeals, the assessee has challenged order dated 21.4.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in Int. TA Nos. 66 to 70/Ahd./2003 for the Assessment Years 1994-95 to 1998-99, whereby the Tribunal has dismissed the appeals of the assessee and confirmed the order passed by the Commissioner of Income Tax (Appeals) [for short CIT (A)]. 2. While admitting these appeals, this Court has framed following substantial questions of law. "(i) Whether, in the facts and under the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the Appellant is a credit institution under the provisions of Interest Tax Act and further liable to pay tax on chargeable interest earned by it? (ii) Whether, in the facts and under the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that gross interest receipt should be compared with the service charges earned and not the net interest income which is much lower than the other income so as to qualify the Appellant as a financial company? (iii) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that the interest earned from the associate and sister concerns on money advanced to them not as a business venture still would qualify the Appellant as a financial company? (iv) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that the Appellant classified as a credit institution when the business of the assessee did not fall in any of the specific clauses (i) to (v) of Section 2(5B) of the Interest Act?" 3. At the time of hearing of these appeals, Mr. Soparkar, learned counsel for the appellant has taken us through Section 2(5B) of the Interest Act, 1974 which provides for the definition of a '"financial company". At the time of hearing of these appeals, Mr. Soparkar, learned counsel for the appellant has taken us through Section 2(5B) of the Interest Act, 1974 which provides for the definition of a '"financial company". Said Section reads as under:- "2.(5B) "financial company" means a company, other than a company referred to in sub-clause (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 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 is declared by the Central Government under section 620A of the Companies Act, 1956, to be a Nidhi or Mutual Benefit Society; (va) 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 contribution or subscriptions or by sale of units or certificates or other instruments or in any other manner; or] (vii) 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;]" 4. He submitted that the assessee is not a financial company as per Clause (v) of Section 2(5B) of the Act, and it cannot be said that the principal activity of the assessee was disbursement of loan. He submitted that the assessee is not a financial company as per Clause (v) of Section 2(5B) of the Act, and it cannot be said that the principal activity of the assessee was disbursement of loan. He further submitted that income of the assessee from the interest was only Rs. 4,86,162/- for the A.Y. 1994-95, it was Rs. 3,25,237/- for the A.Y. 1995-96 while service charge received for the same A.Ys. were Rs. 5,40,132/-, Rs. 3,95,405/- and same is the position for other Assessment Years. He, therefore, submitted that the Tribunal has committed an error in passing the impugned order. In support of his submissions, he has relied upon the decision of the Kerala High Court in Commissioner of Income Tax v. Little Flower Kuries & Enterprises Ltd. reported in [2010] 195 Taxman 93 (Kerala), wherein it was held as under:- "Even though the respondent is admittedly engaged in hire-purchase business, it is not covered by sub-clause (i) of the definition clause because admittedly, the finding of the lower authorities including the Tribunal is that its principal business is chitty and not hire-purchase business or the financing of such transaction. The respondent will come under the tax net as a hire-purchase finance company only if it's principal business is hire-purchasing or financing of such transactions. The Department admittedly does not have a case that the respondent's principal business is in hire-purchase or in financing of such transaction. On the other hand, it is on record that I.T.A. Nos. 199 of 2009 and connected cases the respondent is mainly engaged in chitty business. So much so, it does not fall within sub-clause (i) of the definition clause above stated. Since the respondent does not engage in investment or in housing finance, it does not fall within clauses (ii) and (iii). Though the respondent is engaged in money lending also, admittedly, that is also not its principal business and so much so, it does not fall under clause (iv) above. The respondent is admittedly not a mutual benefit finance company and therefore, falls outside sub-clause (v). Senior counsel appearing for the appellant prays for acceptance of the position that the respondent would fall under sub-clauses (v-a) or (vi). 4. The respondent is admittedly not a mutual benefit finance company and therefore, falls outside sub-clause (v). Senior counsel appearing for the appellant prays for acceptance of the position that the respondent would fall under sub-clauses (v-a) or (vi). 4. Even though the appellants have relied on notes and clauses explaining the scope of financial company reported in 194 ITR (Statutes) 206, on going through the same, we do not find, the assessee is engaged in the business as contemplated in sub-clause (v-a). Even though counsel submitted that the assessee is collecting kuri I.T.A. Nos. 199 of 2009 and connected cases subscription and paying prize amount, we do not think, the contributions or subscriptions referred to in sub-clause (v-a) relate to chitty subscription. In our view, the question whether the assessee would fall within the definition of 'finance company' should be considered with reference to the object of the statute which is to levy tax on chargeable interest. Fundamentally, liability is on interest income, which as defined under Section 2(7) of the Act, means interest on loans and advances made in India and also includes the nature of receipts covered by sub-clauses (a) and (b) of Section 2(7). It is common knowledge that the chitty business is not one which involves advancing of loans. In fact, interest happens to be levied only when subscriber fails to remit the kuri subscription amount in time. The interest on default charged on subscribers cannot be treated as interest on loans or advances. Since chitty business does not involve advancing of loan, we do not think, the legislature I.T.A. Nos. 199 of 2009 and connected cases intended to cover chitty business under the Act. Therefore, in our view, so long as respondent's principal business is chitty, it will not fall within the definition of 'financial company' as defined under Section 2(5-B) of the Act." 5. In view of above, he prayed to allow these appeals by reversing the impugned order. 6. Mr. Parikh, learned counsel for the respondent has contended that the actual income from interest received by the assessee is Rs. 20,37,534/- for the A.Y. 1994-95 including Service charge of Rs. 5,40,132/-. He submitted that, therefore, more than 70% income of the assessee is from interest. He submitted that same is the position in other Assessment Years also. 6. Mr. Parikh, learned counsel for the respondent has contended that the actual income from interest received by the assessee is Rs. 20,37,534/- for the A.Y. 1994-95 including Service charge of Rs. 5,40,132/-. He submitted that, therefore, more than 70% income of the assessee is from interest. He submitted that same is the position in other Assessment Years also. He further submitted that even if we look at the balance sheet as on 31.3.1994, it is clear that the assessee had given Rs. 89,95,449/- towards unsecured loan. He has taken us through other balance sheets and submitted that same is the position in other years also. Therefore, he submitted that the principle business of the assessee is to provide loan and considering its income from interest, the assessee is a "financial company" and the Tribunal has not committed any error while passing impugned order. He, therefore, prayed that these appeals may be dismissed. 7. We have heard learned counsel for both sides. We have also gone through the provisions of law and the material on record. While passing the impugned order, the Tribunal has observed as under:- "7. On the basis of above chart, the assessee claims that interest income is less than service charges in first three years and, therefore, assessee's principal business is not that of granting loans and consequently, not a finance company in view of the decision in the case of Kirloskar Leasing & Finance Ltd., 82 ITD 720 (Pune) and Rajesh Leasing & Finance Ltd., 89 ITC 289 (Rjt). We do not find any merit in the contention of the assessee. Interest income in the three years is Rs. 14,97,441/-, Rs. 11,15,533 and Rs. 4,46,972/- whereas the service charges are only Rs. 5,40,132/-, Rs. 3,95,405/- and Rs. 2,95,098/- which is far less than income receipts. Assessee wants us to take net interest and then compare with gross service charges. That cannot be accepted. Like should be compared with like. 8. The next contention of the assessee is that interest is received and paid to sister concern, group companies as loans and not as a business venture and, therefore, in view of the decision of the Calcutta Tribunal in case of Tara Finvest Ltd. 81 TTJ 631, the assessee would not be a financial company within a meaning of section 2(5B)(iv) of the Act. Here also, we do not find substance in the contention of the assessee. Looking to the amount of interest received by the assessee, it cannot be said that the assessee was not doing it as a business venture. The interest income is regularly there in all the years under consideration which is the main source of income of the assessee and in these circumstances, it cannot be said that the principal business was not granting loan. It would, in our opinion, fall within the definition of section 2(5B)(iv) of the Act which reads as under:- "(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" The decision in the case of Tara Finvest Ltd. (supra) is of no help to the assessee because in that case a finding has been given by the Tribunal that the assessee's principal business was paper trading company and loans and advances have been made to the companies or firms in which the directors were interested which was not the business of the company." 8. Interest income in the three years is Rs. 14,97,441/-, Rs. 11,15,533 and Rs. 4,46,972/- whereas the service charges are only Rs. 5,40,132/-, Rs. 3,95,405/- and Rs. 2,95,098/-. From the balance sheet it is clear that the assessee had given Rs. 89,95,449/- towards unsecured loan. Therefore, in view of clause (v) of Section 2(5B) of the Interest Act, the main activity of the assessee is to provide loan and main source of its income is interest. In view of all these, the questions of law framed for our consideration are required to be answered against the assessee and in favour of the department. Accordingly, all these appeals are dismissed and the impugned order is confirmed.