COMMISSIONER OF INCOME TAX Vs. RAMANATHAN CHETTIAR R

JUDGEMENT

(1.) PURSUANT to the directions of this court in T.C.P. No. 358 of 1983, dated January 23, 1984, the Appellate Tribunal has stated a case and referred the following question of law for our consideration :

(2.) THE point that arises is whether the net interest income received by the assessee from the Indian Overseas Bank, Colombo, after deduction of tax at source is taxable or whether the gross interest income is taxable. THE Appellate Tribunal held that tax can be levied only on the net income received after granting deduction of tax at source in Srilanka. This court, however, in A.F.W. Low v. CIT [1995] 211 ITR 213, held that the gross dividend income should be regarded as having accrued or arisen or received by the assessee and it is only with reference to the gross income, the tax can be levied. Though the decision reported in A. F. W. Low's case [1995] 211 ITR 213 (Mad), was dealing with a case of dividend, the principle laid down in that case would equally apply to the case pertaining to the interest income as well. Accordingly, we hold that the Tribunal was not correct in holding that the tax can be levied only on the net interest income. Accordingly, we answer the question of law referred to us in the negative and in favour of the Revenue. THEre will be no order as to costs.