COMMISSIONER OF INCOME TAX Vs. EXPRESS NEWSPAPERS LIMITED

JUDGEMENT

(1.) THIS is a common reference, under Section 256(1) of the I.T. Act, 1961, of questions referred at the instance of the Commissioner of Income-tax as well as the assessee for the assessment years 1963-64 and 1964-65. We shall first deal with the question referred at the instance of the Commissioner of Income-tax, which runs as follows:

(2.) THE AAC confirmed the disallowance under the said provision. On further appeal, the Tribunal held that the chargeable income of the assessee fell under two heads, viz., " Property income " and " Income from business ", that in computing the property income all the statutory deductions provided under Section 24 had to be allowed, that similarly in computing the business income, all the statutory deductions provided under Section 36 had to be allowed and that since the assessee fulfilled all the conditions laid down in the respective provisions, the interest paid on the equitable mortgages had to be allowed as deduction in computing the income from the " property " and also the income from " business ". THE Commissioner, feeling aggrieved by this order, has brought the matter on reference raising the question as extracted above.

(3.) IN the United Commercial Hank Ltd. v. CIT, 1957 32 ITR 688 , the assessee, a bank, derived income from interest on securities. It claimed that in the computation of its profits it was entitled to set off the carried over loss from the previous year against the profits of the year of assessment under Section 24(2) of the 1922 Act. The interest on securities was liable to be assessed under Section 8 of the 1922 Act. However, the assessee claimed that because it was a bank, and had acquired the securities in the course of its business, the income from the securities was liable to be assessed under the head "Business". The Supreme Court rejected this contention. IN doing so, it observed at page 695 as follows :