THE COMMISSIONER OF INCOME TAX vs. M/S PUNJAB NATIONAL BANK

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ITA/729/2005HC DelhiDLHC01059728200517 January 2018Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE CHANDER SHEKHAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue in question is covered against the Revenue by the decisions of the Supreme Court in Commissioner of Income Tax, Kanpur Vs. Sahara India Savings and Investment Corporation Limited, (2009) 17 SCC 43 and Commissioner of Income Tax, Gandhinagar Vs. Gujarat Industrial Investment Corporation, (2016) 388 ITR 484 SC. Consequently, the question of law was answered against the Revenue and in favour of the respondent-assessee. The appeal was disposed of with no order as to costs. The ratio decidendi is that interest earned on government securities and bonds is not taxable under the Interest Tax Act, 1974, as per the Supreme Court's pronouncements.

What were the facts?

The Revenue has filed an appeal under Section 21 of the Interest Tax Act, 1974, read with Section 260A of the Income Tax Act, 1961, against the order dated 18th January, 2005, passed by the Income Tax Appellate Tribunal (ITAT). The appeal pertains to Assessment Year 1997-1998 and concerns the case of M/s Punjab National Bank (formerly P.N.B. Capital Services Limited). The High Court admitted the appeal on a substantial question of law on 1st December, 2005. The dispute revolves around the taxability of interest earned on government securities and bonds.

What were the issues?

1. Whether interest earned on Government securities and bonds is chargeable to tax under Section 5 read with Section 2(5) and 2(7) of the Interest Tax Act, 1974? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. Revenue's Contention: The Revenue contends that interest earned on Government securities and bonds is chargeable to tax under the relevant provisions of the Interest Tax Act, 1974. The Revenue is the appellant, and the question of law was framed at its instance.

Which sections of the Income-tax Act were involved?

Section 21,Section 260A,Section 5,Section 2 (5),Section 2 (7)

AI-generated summary — verify with the full judgment below

$~R 38 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ ITA 729/2005

THE COMMISSIONER OF INCOME TAX ..... Petitioner Through Mr. Ruchir Bhatia, Sr. Standing Counsel.

versus

M/S PUNJAB NATIONAL BANK ..... Respondent

Through

CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR

O R D E R %

17.01.2018

This appeal by the Revenue under Section 21 of the Interest Tax Act, 1974 read to Section 260A of the Income Tax Act, 1961 pertains to Assessment Year 1997-1998 and arises from Interest Tax Appeal No. 52/Del/2001 and impugns order dated 18th January, 2005 passed by the Income Tax Appellate Tribunal in the case of Punjab National Bank formerly Known as P.N.B. Capital Services Limited. 2. By order dated 1st December, 2005, the appeal was admitted on the following substantial question of low:- “1. Whether interest earned on Government securities and bonds are chargeable to tax under Section 5 read with Section 2 (5) and 2 (7) of the Interest Act?”

3.

The issue in question is covered against the Revenue-Appellant by the decision of the Supreme Court in Commissioner of Income Tax, Kanpur Vs. Sahara India Savings and Investment Corporation Limited, (2009) 17

SCC 43 and Commissioner of Income Tax, Gandhinagar Vs. Gujarat Industrial Investment Corporation, (2016) 388 ITR 484 SC. 4. The question of law is accordingly answered against the Revenue and in favour of the respondent-assessee. The appeal is disposed of. There would be no order as to costs.

SANJIV KHANNA, J.

CHANDER SHEKHAR, J. JANUARY 17, 2018 MR/NA

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