KARUR VYSYA BANK LTD Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) These appeals relate to the computation of the chargeable interest under the Interest Tax Act.

(2.) The assessee is a scheduled bank. For the assessment year 1981-82 corresponding to the previous year ended 31-12-1980, the assessee filed a return declaring chargeable interest of Rs. 2,61,70,641. the IAC ( Assessment) however determined the chargeable interest at Rs. 2,70,48, 754. The assessee appealed and contended that interest paid by the assessee to Agricultural Refinance and Development Corporation and Industrial Development Bank of India amounting to Rs. 8,65,362 should be taken into account in determining the chargeable interest.

(3.) For the assessment years 1982-83, corresponding to the previous year ended 31-12-1981, the amount in dispute is Rs. 17,75,019. The CIT ( Appeals) agreed with the IAC (Assessment) that there is no provision for deducting the interest paid by the assessee in computing the chargeable interest and that it could not be said that the interest paid by the assessee amounted to diversion of income by overriding title. therefore, he confirmed the assessment on this point.