9911796707
TMI Blog1972 (9) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on securities, business in banking and from other sources. For the assessment year 1962-63, the bank received a sum of Rs. 5,476 towards interest on the following securities issued by the Mysore Government. 1. The Mysore Government 4% conversion loan 1953-63. 2. The Mysore 3% loan 1956-61. The assessee-bank claimed rebate on this entire amount under section 86(i) of the Income-tax Act, 1961. But the Income-tax Officer deducted a sum of Rs. 4,089 as the proportionate interest on the money borrowed for the purpose of the investment and proportionate expenses in realising the said interest on the securities and arrived at the net income under this source at Rs. 1,387. The assessee preferred an appeal to the Appellate Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest on tax-free securities and the other expenses is artificial, illogical and not permitted under the provisions of the Income-tax Act. Though this point was not raised before the Income-tax Officer or the Appellate Assistant Commissioner, the Appellate Tribunal allowed that point to be raised, but answered it against the assessee on the ground that the language of sections 19 and 20 supported the method of computation adopted by the Income-tax Officer. At the instance of the assessee, the following two questions have been referred for our decision : " 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the relief under section 86 was only with reference to the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed that rebate should be allowed on the entire sum of Rs. 44,720 received as interest from the said security, but the Income-tax Officer deducted proportionate interest and expenses and he granted only a sum of Rs. 7,236 as rebate for income-tax. Though the Appellate Assistant Commissioner confirmed the Income-tax Officer's order, the Income-tax Appellate Tribunal held that the bank was entitled to a rebate on the gross amount of interest amounting to Rs. 44,720. The High Court of Kerala agreed with the Tribunal. On appeal filed before the Supreme Court, the Supreme Court held that the notification should be construed on its own terms in its application to the question of rebate and that there was no scope for controlling the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax and not from super-tax. The following classes of income shall be exempt from the tax payable under the said Act, but shall be taken into account in determining the total income of an assessee for the purposes of the said Act : - ...... (3) Interest receivable on the following securities issued by the Mysore Government: - ...... (2) Mysore Government 4 per cent. Conversion Loan 1953-63....... (4) Mysore 3 per cent. Loan 1956-61......... " Under section 297(2)(1) of the Income-tax Act, 1961, notwithstanding the repeal of the Income-tax Act, 1922, any notification issued under sub-section (1) of section 60 of the repealed Act and in force immediately before the commencement of the new Act, shall, to the extent to which prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. It is, therefore, necessary to find out as a fact whether any security, from which interest has been received and included in the total sum of Rs. 5,476 claimed as rebate in this case, became chargeable to income-tax during the accounting year relevant to the assessment year 1962-63 in this case. The Tribunal and the authorities below did not consider this question as the notification itself did not figure for consideration before them. We, therefore, direct the Tribunal to go into the question whether any of the securities became chargeable to income-tax during the accounting period relevant to the assessment year 1962-63 and give relief in accordance with the law stated above. The assessee would be entitled to his costs. Counsel's fee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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