2021 (9) TMI 555 - HC - Income Tax

Accrual of income - Addition on interest on securities - HELD THAT - As decided in assessee's own case 2021 (9) TMI 484 - MADRAS HIGH COURT as relying on CITY UNION BANK LIMITED. 2007 (2) TMI 187 - MADRAS HIGH COURT held that the assessee is taxable for interest on securities only on specified dates when it becomes due for payment, in view of third proviso to s.145(1) of the Act, which was in force during the relevant assessment years.

Summary

Issues involved:
- Addition of interest on securities for the assessment year 1990-91
- Treatment of loss on revaluation of securities as trading assets for deduction
- Deletion of additions made on interest on securities for various assessment years

Analysis:
1. Addition of interest on securities for the assessment year 1990-91:
The High Court considered whether the Income Tax Appellate Tribunal was correct in holding that the addition on interest on securities for the assessment year 1990-91, amounting to a significant sum, was not liable to tax. The Court examined the arguments presented by both the appellant/Revenue and the respondent/assessee. It was noted that in a previous case related to the same assessee, the substantial questions of law had been resolved in favor of the assessee, indicating a consistent legal position on this matter.

2. Treatment of loss on revaluation of securities as trading assets for deduction:
Another issue addressed was the treatment of loss on the revaluation of securities as trading assets in order to claim a deduction. The Court reviewed the relevant provisions of the Income Tax Act and previous legal precedents to determine the correct approach in this case. It was highlighted that the Tribunal's decision in a similar case favored the assessee, leading to a dismissal of the Revenue's appeal.

3. Deletion of additions made on interest on securities for various assessment years:
The Court also examined the deletion of additions made on interest on securities for different assessment years. It was observed that the Tribunal's decisions in similar cases had consistently ruled in favor of the assessee, citing specific legal references and judgments to support their conclusions. The Court referred to past judgments where the tax treatment of interest on securities was clarified, ultimately leading to the dismissal of the Revenue's appeals in this instance.

In conclusion, the High Court, through a common judgment, dismissed the Tax Case Appeals filed by the Revenue, answering the substantial questions of law against the Revenue. The Court relied on legal precedents and interpretations of the Income Tax Act to uphold the decisions made by the Income Tax Appellate Tribunal in favor of the assessee. No costs were awarded in this matter.