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TMI Blog1990 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 37(2A) should be applied not only with reference to the income computed under section 28, but also taking into account the income computed under the head 'Interest on securities', if the securities are held as stock-in-trade ?" For the assessment year 1978-79, the assessee, Vysya Bank Limited, Bangalore, claimed that in determining the limit of permissible deduction under section 37(2A), the limit stated therein should be applied not only with reference to the income to be computed under section 28 under the head "Profits and gains of business" before the allowance of such expenditure, but also taking into account the income computed under the head "Interest on securities". The Income-tax Officer repelled that contention and allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. Indian Overseas Bank [1980] 123 ITR 790 was nearer to the point and directly on the question and, therefore, the view taken by the Commissioner of Income-tax (Appeals) was correct and did not call for interference. On such rival contentions, the Tribunal appears to have come to the conclusion that the Commissioner of Income-tax (Appeals) should have ascertained the manner in which the securities were held as investment made by it, i.e., stock-in-trade or in some other capacity. Nevertheless, after setting aside the order of the Commissioner, the Tribunal has referred the question to us as extracted earlier in the course of this order. We find that the Tribunal was not correct in directing the Commissioner to ascertain the character a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profession". Whereas, at the relevant time, computation of income and assessment of income from interest on securities was under sections 18, 19 and 20 of the Act, section 20 permitted certain allowances which alone was admissible in respect of income by way of interest on securities and not available to other incomes under other heads. Therefore, if an assessee has income from more than one source, each of his income from different sources has to be assessed having regard to the provisions which govern the computation of that income and allowances permissible to the source of that income. It is not unusual that an assessee may derive income by way of salary, by way of house property, by way of private lands, by way of business, by way of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,489, it would be entitled to an allowance of Rs. 8,565 under the head "Interest on securities". That claim for allowance of a higher amount was upheld by the Tribunal. On a reference of the question which is as follows (at p. 792) : "Whether, on the facts and in the circumstances of the case, it has been rightly held that in computing the admissible deduction under section 37(2) of the Income-tax Act, 1961, the interest on securities should also be considered as business income ?" The Madras High Court answered the question in the negative. In other words, in the operative portion of the order, their Lordships of the Madras High Court held that the assessee was eligible only for the allowance of Rs. 24,763 by way of entertainment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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