The High Court在法律费用是否属于第10(23G)条豁免范围内的问题上，部分允许了 appelant 的上诉。法院认定，根据第2(28A)条的广义解释，法律费可视为与融资相关的费用从而免税，但要求缺乏事实依据的放款人代理费未被支持。
The Tax Case Appeal was partially allowed; substantial questions of law on legal fees were answered in favour of the appellant.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
2026:MHC:674
TCA No.170 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20-01-2026
CORAM
THE HON'BLE DR.JUSTICE ANITA SUMANTH
AND
THE HON'BLE MR.JUSTICE MUMMINENI SUDHEER KUMAR
TCA No.170 of 2013
M/s IDFC Limited
KRM Towers, 8th Floor, No.1, Harringon Road, Chetpet, Chennai – 600 031.
..Appellant
Vs
The Assistant Commissioner Of Income Tax, Company Circle II(3), Chennai.
..Respondent
Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961 against
Income Tax Appeal No.87/Mds/2012 DATED 28.09.2012 on the file of the Income Tax Appellate Tribunal, Chennai “C” Bench for the assessment year 2006 – 2007.
For Appellant(s): Mr.Niraj Sheth For Respondent(s): Mr.T.Ravikumar Senior Standing Counsel
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TCA No.170 of 2013
JUDGMENT
(Judgment of the Court was delivered by Dr.Anita Sumanth J.)
This Tax Case (Appeal) relating to assessment year 2006-07 has been filed at the instance of the assessee assailing order dated 28.09.2012 passed by the Income Tax Appellate Tribunal (in short ‘ITAT”/’Tribunal’).
are taken up for consideration in seriatim. The first and second substantial questions of law read as follows:
1. Whether the Income Tax Appellate Tribunal erred in holding that the appellant was not entitled to the exemption under Section 10(23G) of the Act in respect of Legal Fees and Lenders Agency Fees?
2. Whether the Income Tax Appellate Tribunal ought to have held that Legal Fees and Lenders Agency Fees were entitled to the exemption under Section 10(23G) of the Act inter alia as such receipts fell within the definition of "interest" in Section 2(28A) of the Act?
Income Tax Act, 1961 (in short ‘Act’) in respect of legal fees, charged by the
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TCA No.170 of 2013
appellant for the documentation done in connection with the provision of long
term finance to clients. The claim of the appellant was that it would come
within the definition of ‘interest’ under Section 2(28A) which reads as follows:
(28A) “interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or 8 in respect of any credit facility which has not been utilised.
view that the term is wide and brings within its coverage moneys that are charged in respect of borrowals or debts incurred including ‘other charges’ in respect of the same. In fact, the definition is wide enough to address even credit facilities that have not been utilised.
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TCA No.170 of 2013
dictates that moneys are recovered at different stages at the time of disbursement of loan. In fact, appraisal fee and front end commission are collected by the Bank even prior to actual disbursement in respect of services rendered for appraisal of the creditworthiness of the borrower, and other preliminary services.
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TCA No.170 of 2013
conclusion of the Tribunal is on this ground, as no material was placed before the Tribunal to substantiate the nature of fee received under this head. In such circumstances, we do not find any question of law much less substantial question of law, that arises for consideration with regard to Lender’s Agency fee and hence, this issue is answered adverse to the appellant.
3. Without prejudice to above and in the alternative whether on the facts and in the circumstances of the case, the Tribunal ought to have held that the Legal Fees and Lenders Agency Fees were eligible for deduction under Section 36(1)(viii) of Act since the above amounts were earned from long term finance provided to infrastructure enterprises and in the event the income derived from such long term finance was not treated as "interest" eligible for exemption under Section 10(23G), the same were "profit" derived from business of long term finance of infrastructure facility and hence eligible for deduction under Section 36(1)(viii)?"
this substantial question of law. Hence, and recording the endorsement made, this substantial question of law is returned unanswered.
(A.S.M.,J.) (M.S.K.,J.) 20-01-2026
Index: Yes Speaking order Neutral Citation: Yes sl
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TCA No.170 of 2013
DR.ANITA SUMANTH J.
AND
MUMMINENI SUDHEER KUMAR J.
sl
To
TCA No.170 of 2013
20-01-2026
__________ Page 6 of 6
2 issues framed by the court
Whether legal fees are entitled to exemption under Section 10(23G) of the Income Tax Act as they fall within the definition of interest under Section 2(28A)?
Whether the Tribunal was correct in holding that legal fees did not qualify as service fees or other charges under Section 2(28A)?
3 provisions across 1 enactments
M/s IDFC Limited
The Assistant Commissioner Of Income Tax, Company Circle II(3), Chennai
Anita Sumanth
Mummineni Sudheer Kumar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
