Just a moment...

Report
FeedbackReport
Bars
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2008 (3) TMI 305

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....est-tax is not payable under the Interest-tax Act, 1974, as amended by the Finance (No. 2) Act of 1991, on interest on Government securities received by the respondent-banks. We have heard senior counsel appearing for the Income-tax Department for the appellant and counsel appearing for the respondent-assessee in all these cases. 2. The short question arising for consideration is whether interest on securities is chargeable to tax under the Interest-tax Act, 1974. In fact, until the amendment of the Interest-tax Act in the year 1991, there was specific exclusion of interest on securities from the scope of interest as defined under section 2(7) of the Act. The issue cropped up and survives only for the assessment years 1992-93 to 1995-96 be....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....asury bills." 3. Counsel for the Revenue contended that after the exclusion clause is removed through the amendment in 1991, interest on securities falls within the definition of "interest" under section 2(7) as it is also interest. However, counsel for the assessees on the other hand contended that what is chargeable under the Interest-tax Act is not all interest received by "credit institutions", but interest on "loans and advances" and other charges treated as interest are covered by clauses (a) and (b) of the definition clause. Counsel for the assessees has relied on the decisions of this court in CIT v. Nedungadi Bank Ltd. [1991] 189 ITR 121 in CIT v. Federal Bank Ltd. [1991] 189 ITR 117 that of the Madras High Court in CIT v. Karur V....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the Revenue between securities of a permanent nature and current securities has any relevance because what attracts tax under the Act is interest received on loans and advances. So long as Government security is concerned, whatever be its nature, it does not answer the description of "loans and advances" covered by section 2(7) of the Act. There is no justification to levy interest-tax on the interest received on investment in the nature of Government securities. Standing counsel for the Revenue heavily relied on the amendment of 1993 whereunder specific exclusion from "interest" originally provided for "interest on securities" under section 2(7)(b)(i) is deleted. According to him, the purpose of the amendment is to bring to tax interest in....