COMMISSIONER OF INCOME TAX Vs. A R SANTHANAKRISHNAN

JUDGEMENT

(1.) IN the above reference cases, we are called upon to give our opinion on the following question of law :

(2.) THE necessary facts are as follows : The assessees are individuals. For the asst. year 1992 93, the assessee claimed deduction under s. 54E of the IT Act, 1961 (hereinafter referred to as "the Act"), for the amounts deposited in the National Housing Bank Three Year Bond. The interest was payable at the rate of 9 per cent by the Government. Both the assessees had opted for the discounted interest and the same was paid to the assessees during the year under assessment. The assessee, A.R. Santhanakrishnan received the discounted interest of Rs. 11,28,000 on 9th July, 1991, on the deposit of Rs. 47 lakhs. Likewise, the other assessee A.R. Chandrika received the interest of Rs. 2,29,680 on 9th July, 1991, on the deposit of Rs. 9,57,000. But the assessees offered for income tax one third of the interest received by them as the interest accrued for the asst. year 1992 93. The AO did not agree to the proposal of the assessees, however brought the entire interest amount received by the assessees to tax for the said assessment year.

(3.) ON further appeal to the Tribunal, the Tribunal held the claim of the assessees that only one third of the interest received was alone taxable for the asst. year 1992 93 is correct.