1990 (9) TMI 5 - SC - Income Tax

Assessee purchased securities - It is contended that the price paid for the securities was determined with reference to their actual value as well as the interest which had accrued on them till the date of purchase - amounts claimed by the assessee as deduction are not shown to have been expended for the purpose of realising the interest and are, therefore, not allowable as deductible expenditure.

Summary

The Supreme Court dismissed the appeal regarding the deduction of interest on securities purchased by a banking company, holding that the interest income was taxable under section 18 of the Income-tax Act. The Court ruled that the amounts expended for purchasing the securities were capital outlay and not allowable as deductible expenditure against the interest income. The appeal was dismissed with costs.