INDIAN BANK LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these references, the main question for consideration is as to the applicability, to the facts and circumstances, of the first proviso to S. 8 and the two explanations thereto in the INcome-tax Act 1922. The assessee is a well known banking company with its registered office at Madras. It holds securities issued by the then Mysore Durbar of the value of about 21/2crores of rupees as in 1950 and it is common ground there has been no addition thereafter to the securities. The income from these securities was income-tax free, but liable to super tax. For the assessment years 1956-57 to 1959-60, the profits or losses on the purchase and sale of such securities, among others, were taken into account in computing the total income of the assessee under "business".

(2.) THE Tribunal, as a fact, found that the assessee had, in the years in question, incurred no expenses for collecting interest on the Mysore Durbar Securities and that the securities themselves had been originally purchased from the assessee's funds, which included deposits of various kinds from the public to whom it paid interest, depending on the nature on the deposits. THE Tribunal was specifically of opinion that the securities had been purchased out of the capital reserves and accumulated profits and that this was supported by figures of investments placed before it for all the four years. In view of the argument before it for the Revenue, the Tribunal had gone into the matter and found that there was nothing on record, by an examination of the figures, either by the Income-tax Officer, or the Appellate Assistant Commissioner, to support the view that any expenses as such were incurred or that any expenses as such were incurred or that borrowed moneys were used for the investment in tax free securities. THEse are findings of facts which cannot be reviewed and must be taken as final for purposes of the references.

(3.) ON that view, as we mentioned at the outset, questions 1 and 2 in the other reference do no call for consideration. But we may in passing, not Commissioner of Income-tax v. South Indian Bank Ltd. where the Supreme Court recently held that, on a construction of a notification under S. 60, rebate of income-tax should be on the entire interest earned from securities issued by a former Native State and not on the total receipt by way of interest from such securities minus the amounts spent in collecting or receiving the same. This view, undoubtedly, goes a long way in favour of the assessee on the fourth contention of Mr. Venkataram.