9911796707
TMI Blog2023 (6) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act, 1961 (briefly, 'the Act' hereinafter) against the order dated 28.10.2005 passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad (Tribunal) in I.T.A.No.662/Hyd/2003 for the assessment year 1997-1998. 3. Learned counsel for the parties are in agreement that issue raised in this appeal is squarely covered by the decision of this court dated 04.01.2023 passed in I.T.T.A.No.328 of 2006 (Commissioner of Income Tax-III v. State Bank of Hyderabad) wherein parties were the same. 4. In fact, I.T.T.A.No.328 of 2006 arose out of the same order of the Tribunal dated 28.10.2005 passed in I.T.A.No.661/Hyd/2003 for the assessment year 1996-1997. 5. Relevant portion of the judgment and order dated 04.01.2023 passed in I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Reserve Bank of India pays interest on due dates on such securities to the holders of the securities, every six months. The Reserve Bank of India pays interest on the balance to the banks, whose names appear as holders in the PDO ledger. After subscribing to the said loans, the banks were free to transfer such loans for consideration to the other banks. Consequently, the Reserve Bank of India pays interest to the holder on the balances in a security if, in its books, the said security stood in the name of that holder on the due date for payment of interest. As stated above, to maintain SLR levels, every bank subscribes to such loans. This is a part of banking business. However, after so subscribing, the banks are free to deal with such s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erable. Reserve Bank of India pays interest on due dates on such securities to the holders of the securities every six months. After subscribing to the said loans, banks are free to transfer such loans for consideration to other banks. Reserve Bank of India pays interest to the holder on the balances in a security if in its books the said security stands in the name of that holder on the due date for payment of interest. The above exercise, if we may say so, is a part of the banking business. However, after so subscribing, the banks are free to deal with such securities like any other trader. Therefore, there are two activities involved - one of subscribing to the loan and the other is trading. 18. One of the questions before the Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived but at the same time ought to have allowed deduction for the broken period interest paid. 21. As already noticed above, this decision of the Bombay High Court has found favour with the Supreme Court in Commissioner of Income Tax v. Citibank N.A. (2008 (8) TMI 766) where Supreme Court agreed with the views expressed by the Bombay High Court. Decision of the Supreme Court in Commissioner of Income Tax v. Citibank N.A. (2008 (8) TMI 766) is dated 12.08.2008 whereas decision of the Rajasthan High Court in Commissioner of Income Tax v. Bank of Rajasthan Limited ((2009) 316 ITR 291) is dated 24.03.2008. 22. Before we advert to the facts of the present appeal, we may refer to the decision of the Kerala High Court in Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the 4th question as to whether the Tribunal was justified in allowing the claim for deduction of interest paid for the broken period for acquisition of the securities till the date of such securities, Kerala High Court held that the said question was squarely covered by its earlier decision in Commissioner of Income Tax v. South Indian Bank Ltd. ((2000) 241 ITR 374 (Ker)) wherein it was held that interest paid for the broken period would constitute allowable outgo in the hands of the assessee and was an admissible deduction in the computation of total income of the assessee (bank) under the head 'profits and gains of business or profession'. 23. Adverting to the facts of the present case, we find that it is the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
