COMMISSIONER OF INCOME TAX Vs. CHUGANDAS AND CO

JUDGEMENT

(1.) THE question referred to this Court upon this reference is :

(2.) THE facts necessary for the purpose of determining this question are few. The assessee held securities as his stock -in - trade and he received interest on these securities in the asst. yrs. 1947 - 48 and 1948 -49, in the sums of Rs. 4,13,992 and Rs. 1,01,229 respectively. It was held by the IT authorities that the assessee was entitled to the benefit of the provisions of S. 25(3), and if, therefore, interest on securities was within the scope of that benefit, this interest would not be taxable. If, on the other hand interest on securities is outside the scope of the benefit conferred by s. 25 (3), this interest would have to be taxed. The matter was dealt with by the Tribunal, the Members of which took different viewsdone taking the view that interest on securities was taxable under S. 10 and another that it was taxable under S. 8. The matter was, therefore, referred to the President, who took the view that interest from securities was taxable under S. 10 and not under s.8. The majority of Members of the Tribunal, having held that interest on securities was taxable under S. 10, also held that it was exempt from taxation under S. 25(3). It is out of these orders of the Tribunal that the present reference arises.

(3.) NOW , turning next to S. 25(3), it is in the following terms :