Commissioner Of Income-tax, Kerala VS. South Indian Bank Ltd. Trichur

Summary

---

The respondent was a banking company. During the accounting year for the assessment year 1956-57 the Bank received a certain sum towards interest in respect of tax free securities, and claimed rebate for the whole amount under the notification issued by the Central Government in exercise of its power under s. 60-A of the Indian Income-tax Act, 1922. The Income-tax Officer however, while completing the assessment allowed rebate only on the amount of interest that remained after deduction of sums expended by the assessee in realising the said interest and the interest payable on the money borrowed for the purpose of investment.

The Appellate Assistant Commissioner upheld the order of the Income-tax Officer but the Tribunal held that the respondent was entitled to rebate on the gross amount of interest. In reference, a Division Bench of the High Court upheld the Tribunal's view; the Commissioner of Income-tax appealed to this Court.

It was contended for the Revenue that the exemption under the third proviso to s. 8 was only in regard to that part of the interest which was taxable but for the exemption. The further contention was that the notification issued by the Central Government under s. 60-A of the Income-tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of s. 8 of the Income-tax Act.

HELD : The notification had to be construed on its own terms in its application to the question of rebate raised in the present case. It is not intended to cover the same ground occupied by s. 8, and there is no scope for controlling the provisions of the notification with reference to s. 8. The expression 'interest receivable on income-tax free loans' in the notification is clear and unambiguous, and can only mean the amount of interest calculated as per the terms of the securities. It cannot obviously mean interest receivable minus the amount spent in receiving the same. No income-tax was therefore payable in respect of the interest by the assessee from the securities in question. [677 E-G]

See the full content of this document

Extract

---

Commissioner Of Income-tax, Kerala VS. South Indian Bank Ltd. Trichur

PETITIONER: COMMISSIONER OF INCOME-TAX, KERALA Vs.

RESPONDENT: SOUTH INDIAN BANK LTD. TRICHUR

DATE OF JUDGMENT: 23/11/1965

BENCH: SUBBARAO, K.

BENCH: SUBBARAO, K.

SHAH, J.C.

SIKRI, S.M.

CITATION: 1966 AIR 1541 1966 SCR (2) 674

CITATOR INFO : R 1979 SC1691 (9)

E&D 1985 SC1585 (5)

ACT: Indian Income-tax Act, 1972, s. 8--Interest on securities--Claim of rebate under notification issued under s. 6OA--Rebat...

See the full content of this document

---