“interest on securities”

Chapter I - PreliminarySection 2 - DefinitionsSection 2(28B) / ITR Schedule OS681 judgments

The decision most relied on for interest on securities is South Indian Bank Ltd. v. CIT (438 ITR 1), cited in 508 judgments on BharatTax.

Leading authorities on interest on securities

South Indian Bank Ltd. v. CIT

438 ITR 1 · 2021 · Supreme Court

508

citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Punjab State Cooperative Agricultural Development Bank Ltd.

389 ITR 68 · 2016 · High Court

192

citing judgments

Income earned by a cooperative society from investing its surplus funds in short-term deposits and securities is not attributable to its core activities and therefore not eligible for deduction under Section 80P(2)(a)(i) of the Income-tax Act.

CIT v. Microlabs Ltd.

383 ITR 490 · 2016 · High Court

175

citing judgments

If an assessee possesses interest-free funds exceeding investments in tax-free securities, it is presumed that investments are made from these own funds, precluding disallowance of interest expenditure under Section 14A read with Rule 8D(2)(ii). Additionally, weighted deduction under Section 35(2AB) is computed on the gross expenditure incurred, not net expenditure after reducing income earned.

CIT v. Southern Eastern Employees Cooperative Credit Society Ltd.

390 ITR 524 · 2017 · High Court

170

citing judgments

Income from surplus funds invested in short-term deposits and securities by a cooperative credit society is not attributable to its activities and is therefore not eligible for exemption under section 80P(2)(a)(i) of the Income-tax Act.

CIT v. Vijaya Bank

187 ITR 541 · 1991 · Supreme Court

116

citing judgments

The 'broken period interest' paid on securities is considered part of the capital outlay for acquiring those securities and cannot be allowed as a revenue expenditure or business deduction. It must be capitalized.

American Express International Banking Corporation v. CIT

258 ITR 601 · 2002 · High Court

citing judgments

Interest paid by banks is allowable as a deduction in computing total income. The decision distinguished the Supreme Court's ruling in Vijaya Bank regarding the deductibility of such interest.

CIT v. Moni Kumar Subba

333 ITR 38 · 2011 · High Court

citing judgments

Notional interest on an interest-free security deposit cannot be considered as actual or deemed rent under Section 23(1) of the Act. For determining Annual Letting Value (ALV) under Section 23(1)(a), it must be in accordance with municipal laws, considering extraneous circumstances, but not exceeding the standard rent as per rent control legislation.

1. Bihar State Co-operative Bank Ltd. v. CIT

39 ITR 114 · 1960 · Supreme Court

citing judgments

Interest income earned by a co-operative bank from the investment of its surplus funds, including those statutorily required to be placed in approved securities, is attributable to its banking business and qualifies for deduction under Section 80P(2)(a)(i).

Judgments citing interest on securities

Jeeta Ram, Faridabad vs. ITO Ward 1(3), Faridabad

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 1851/DEL/2024[2017-18]Status: DisposedITAT Delhi09 Oct 2024AY 2017-18

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI SUDHIR PAREEK (Judicial Member)

For Appellant: Shri Sanjay Tiwari, CAFor Respondent: Shri Om Parkash, Sr. DR

Section 142(1)Section 144Section 147Section 148Section 69A

case are, an information through AIMS has been received under the information code TDS-194A that the assessee has interest income other than ‘Interest on securities’ of Rs.36,04,500/- and assessee has purchase of time deposits (other than a time deposit made through renewal of another time deposit

Federation of Rajasthan Trade and Industry, Jaipur vs. ITO-Exemption Ward-2, Jaipur

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 217/JPR/2024[2014-15]Status: DisposedITAT Jaipur04 Oct 2024AY 2014-15

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Rahul Pandya (Adv.) &For Respondent: Shri Anoop Singh (Addl.CIT) a

Section 127Section 12ASection 142(1)Section 143(2)Section 143(3)Section 250

section 49, by the previous owner, but does not include any expenditure which is deductible in computing the income chargeable under the head Interest on securities, Income from house property, Profits and gains of business or profession, or Income from other sources and the expression improvement shall be construed accordingly

DCIT-CC-5(3), Mumbai, Air India Building, Nariman Point vs. Kotak Mahindra Life Insurance Company Limited, Mumbai

In the result, the appeal of the revenue is dismissed

ITA 2352/MUM/2024[2020-21]Status: DisposedITAT Mumbai03 Oct 2024AY 2020-21

Bench: Shri Amit Shukla & Shri Gagan Goyaldcit, Cc 5(3), 1906, 19Th Floor, Air India Building, Nariman Point, Mumbai - 400 020. ..... Appellant Vs. Kotak Mahindra Life Insurance Co. Ltd. 8Th Floor, 12Bkc, Bandra Kurla Complex, G Block, Mumbai – 400 051 Pan No. Aaaco3983B ..... Respondent

For Appellant: Shri Biswanath Das, Ld. DRFor Respondent: Shri Farooq Irani, Ld. AR

Section 10Section 10(34)Section 115BSection 142(1)Section 143(1)Section 143(2)Section 14ASection 250Section 44

insurance business only. Moreover Sec. 44 mandates that only First Schedule will apply for computing incomes and excludes other heads of income like, Interest on Securities, income from house property, Capital gains or Income from other sources. Being non-obstante clause, sec. 44 mandates that the profits and gains

Dy. Commissioner of Income Tax, Central Circle-5(1), Mumbai. vs. Ekjyot Properties, Mumbai

ITA 3107/MUM/2023[2019-20]Status: DisposedITAT Mumbai27 Sept 2024AY 2019-20

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Jaiprakash BairagraFor Respondent: Shri Manoj Kumar Sinha, Sr. DR

Section 132Section 153CSection 69ASection 69C

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “E”, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH

Income Tax Officer, Gangtok vs. Kailash Agarwal, Gangtok

In the result, the all the captioned appeals of the revenue stand dismissed

ITA 1462/KOL/2023[2018-19]Status: DisposedITAT Kolkata23 Sept 2024AY 2018-19

Bench: Shri Sanjay Garg & Shri Sanjay Awasthi

Section 10Section 250

Kailash Agarwal, Gangtok income should be derived ‘from any source in the State of Sikkim by way of dividend or interest on securities’. 6. At this stage, the ld. DR has contended that the assessee has not proved that the source of income was derived from the State of Sikkim

Income Tax Officer, Gangtok vs. Kailash Agarwal, Gangtok

In the result, the all the captioned appeals of the revenue stand dismissed

ITA 1461/KOL/2023[2016-17]Status: DisposedITAT Kolkata23 Sept 2024AY 2016-17

Bench: Shri Sanjay Garg & Shri Sanjay Awasthi

Section 10Section 250

Income Tax Officer, Gangtok vs. Kailash Agarawal, Gangtok

In the result, the all the captioned appeals of the revenue stand dismissed

ITA 1459/KOL/2023[2013-14]Status: DisposedITAT Kolkata23 Sept 2024AY 2013-14

Bench: Shri Sanjay Garg & Shri Sanjay Awasthi

Section 10Section 250

Income Tax Officer, Gangtok vs. Kailash Agarwal, Gangtok

In the result, the all the captioned appeals of the revenue stand dismissed

ITA 1458/KOL/2023[2017-18]Status: DisposedITAT Kolkata23 Sept 2024AY 2017-18

Bench: Shri Sanjay Garg & Shri Sanjay Awasthi

Section 10Section 250

Magendra Singh Rathore, Alwar vs. DCIT Central Circle-2, Jaipur

In the result the appeal of the assessee is partly allowed

ITA 483/JPR/2024[2017-18]Status: DisposedITAT Jaipur23 Sept 2024AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Mahendra Gargiya (Adv.) &For Respondent: Shri Anup Singh (Addl. CIT)

Section 143(3)Section 234ASection 36(1)(iii)Section 57

under the head "Income from other sources" shall be computed after making the following deductions, namely :— (i) in the case of dividends, or interest on securities, any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend

Magendra Singh Rathore, Alwar vs. ACIT Central Circle-2, Jaipur

In the result the appeal of the assessee is partly allowed

ITA 460/JPR/2024[2016-17]Status: DisposedITAT Jaipur23 Sept 2024AY 2016-17

For Appellant: Shri Mahendra Gargiya (Adv.) &For Respondent: Shri Anup Singh (Addl. CIT)

Section 143(3)Section 234ASection 36(1)(iii)Section 57

Indore Sahakari Dugdh Sangh Maryadit, Dairy Compound, Manglia vs. Commissioner of Income Tax (Appeals), NFAC, Income Tax Department, Delhi

In the result, the appeals of the assessee are allowed

ITA 294/IND/2024[2020-21]Status: DisposedITAT Indore17 Sept 2024AY 2020-21

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 234ASection 270ASection 80PSection 80P(2)Section 80P(2)(d)Section 80P(4)

power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities chargeable under section 18 or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an urban consumers' co- operative society

Indore Sahakari Dugdh Sangh Maryadit, Dairy Compound, Manglia vs. Commissioner of Income-Tax (Appeals), NFAC, Income Tax Department, Delhi

In the result, the appeals of the assessee are allowed

ITA 293/IND/2024[2018-19]Status: DisposedITAT Indore17 Sept 2024AY 2018-19

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 234ASection 270ASection 80PSection 80P(2)Section 80P(2)(d)Section 80P(4)

Atul Sharma, New Delhi vs. ITO, New Delhi

In the result, appeal of the assessee is allowed

ITA 5803/DEL/2013[2010-11]Status: DisposedITAT Delhi12 Sept 2024AY 2010-11

Bench: Sh. Challa Nagendra Prasad & Sh. M.Balaganeshmr. Atul Sharma Vs. Ito 207, Lawyers Chamber Circle – 37(1) Delhi High Court, New Delhi New Delhi-110 003 Pan No. Aarps 6964 J (Appellant) (Respondent) Assessee By Dr. Rakesh Gupta, Adv., Mr. Audhisthir Mehtani, Adv., Mr. Somil Aggarwal, Adv. & Shri Shrey Jain, Adv. Revenue By Shri Kanv Bali, Sr. D.R. & Shri Vivek Vardhan, Sr.D.R. Date Of Hearing: 05.07.2024 Date Of Pronouncement: 12.09.2024 Order Per M. Balaganesh:

Section 143(3)Section 57

responsible for paying to a resident any income by way of interest other than income (by way of interest on securities) shall, at the time of credit of such Income to the account of the payee or at the time of payment thereof in cash or by issue

Nimshaskiya Madhyanik Shaley Karamchari Sahakari Sanstha Ltd., Wardha vs. Income Tax Officer, Ward-2, Wardha

In the result, appeal filed by the assessee is allowed

ITA 156/NAG/2023[2017-18]Status: DisposedITAT Nagpur09 Sept 2024AY 2017-18

Bench: Shri V. Durga Rao

For Appellant: Shri Abhishek KumarFor Respondent: Shri Abhay Y. Marathe

Section 143(2)Section 56(2)(d)

deposits and share capital. The assessee has also submitted that as per section 56(2)(d) of the Act, interest by way of interest on securities is chargeable under the residuary head i.e, other sources only if the income is not chargeable under the head profit & gains of businesses

ACIT Ltu 2, Chennai vs. Indian Overseas Bank, Chennai

In the result, the appeal of the assessee (ITA No

ITA 946/CHNY/2018[2010-11]Status: DisposedITAT Chennai29 Aug 2024AY 2010-11

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm आयकरअपील सं./ Ita No.775/Chny/2018 (िनधा"रणवष" / Assessment Year: 2010-2011 ) Indian Overseas Bank, Vs. The Deputy Commissioner Of 763, Anna Salai, Income Tax, Chennai 600 002. Large Taxpayer Unit-2, Chennai 600 034. आयकरअपील सं./ Ita No.946/Chny/2018 (िनधा"रणवष" / Assessment Year: 2010-2011. ) The Assistant Commissioner Of Vs. Indian Overseas Bank, Income Tax, 763, Anna Salai, Large Taxpayer Unit-2, Chennai 600 002. Chennai 600 034. [Pan: Aaaci 1223J] (अपीलाथ"/Appellant) (""यथ"/Respondent) Assessee By : Shri. C. Naresh, C.A., Department By : Shri. A. Sasikumar, Irs, Cit. सुनवाई क" तार"ख/Date Of Hearing : 06.08.2024 घोषणा क" तार"ख /Date Of Pronouncement : 29.08.2024

For Appellant: Shri. C. Naresh, C.AFor Respondent: Shri. A. Sasikumar, IRS, CIT

Section 115JSection 143(2)Section 143(3)Section 148Section 263Section 36(1)(viia)

reopen the assessment read as under: - The assessee bank has been maintaining its books of accounts under mercantile basis. However, while admitting the interest on securities for Income Tax purposes, the assessee bank reduced the interest accrued due to profit & loss account and offers the same on receipt basis ... Rs.12,66,24,544/- from the total income for the asst year 1991-92. In as much as the assessee offers the interest on securities on receipt basis, the sum of Rs. 12,66,24,544/- reduced from the total income for the asst year 1991-92 should have been

Indian Overseas Bank, Chennai vs. DCIT Ltu-2, Chennai

In the result, the appeal of the assessee (ITA No

ITA 775/CHNY/2018[2010-11]Status: DisposedITAT Chennai29 Aug 2024AY 2010-11

For Appellant: Shri. C. Naresh, C.AFor Respondent: Shri. A. Sasikumar, IRS, CIT

Section 115JSection 143(2)Section 143(3)Section 148Section 263Section 36(1)(viia)

Dy. Commissioner of Income Tax, Circle- 1(1), Hyderabad vs. Union Bank of India, Hyderabad

In the result, the appeals filed by the assessee as well as the Revenue are partly allowed for statistical purposes

ITA 1230/HYD/2017[2012-13]Status: DisposedITAT Hyderabad28 Aug 2024AY 2012-13

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita No.1018/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2012-13) Andhra Bank Vs. Dy. C. I. T. Hyderabad Circle 1(1) Pan:Aabca7375C Hyderabad (Appellant) (Respondent) आ.अपी.सं /Ita No.1230/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2012-13 ) Dy. C. I. T. Vs. Andhra Bank Circle 1(1) Hyderabad Hyderabad Pan:Aabca7375C (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri Ananthan, Ca राज" व "ारा/Revenue By:: Shri Kumar Pranav, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 02/07/2024 घोषणा की तारीख/Pronouncement: 28/08/2024 आदेश/Order Per Manjunatha, G. A.M These Cross Appeals Filed By The Assessee, As Well As The Revenue, Are Directed Against The Order Dated 16/02/2016 Of Page 1 Of 59

For Appellant: Shri Ananthan, CAFor Respondent: : Shri Kumar Pranav, CIT(DR)

Section 36(1)(vi)Section 36(1)(vii)Section 36(1)(viia)Section 41(4)

should be withdrawn. A reading of this circular would make it clear that the issue was as to whether income by way of interest on securities shall be chargeable to income tax under the head ‘income from other sources’ or it is to fall under the head ‘profits and gains

Union Bank of India, Hyderabad vs. Dy. Commissisoner of Income Tax, Circle-1(1), Hyderabad

In the result, the appeals filed by the assessee as well as the Revenue are partly allowed for statistical purposes

ITA 1018/HYD/2017[2012-13]Status: DisposedITAT Hyderabad28 Aug 2024AY 2012-13

For Appellant: Shri Ananthan, CAFor Respondent: : Shri Kumar Pranav, CIT(DR)

Section 36(1)(vi)Section 36(1)(vii)Section 36(1)(viia)Section 41(4)

DCIT, Circle, Patiala vs. M/S Punjab State Power Corporation Ltd., Patiala

In the result, ground no. 1 & 3 of the Revenue’s appeal is allowed and ground no

ITA 737/CHANDI/2022[2017-18]Status: DisposedITAT Chandigarh27 Aug 2024AY 2017-18

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Rajiv Saldi, CAFor Respondent: Smt. Kusum Bansal, CIT, DR

Section 143(2)

income under the head `Profits and gains of business or profession'. Clause (id) of section 56(2) provides that "income by way of interest on securities, if the income is not chargeable to income-tax under the head 'Profits and gains of business or profession' " shall be chargeable to income ... under the head `Income from other sources'. A bare perusal of this provision indicates that what is referred to in this clause is interest on securities and not other interest. Section 2(28B) defines "interest on securities" to mean, - (i) interest on any security of the Central Government

The Farmers Service Co-Operative Limited, Srikakulam vs. Income-Tax Officer, Ward-1, Srikakulam

In the result, appeal of the Revenue is dismissed

ITA 166/VIZ/2024[2018-19]Status: DisposedITAT Visakhapatnam14 Aug 2024AY 2018-19

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./ I.T.A. No.166/Viz/2024 (िनधा"रण वष" / Assessment Year: 2018-19) The Farmers Service Co-Operative Vs. Income Tax Officer, Limited, Ward-1, Srikakulam. Srikakulam. Pan: Aabtt4377L (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ" क" ओर से/ Appellant By : Sri I. Kama Sastry, Ar ""याथ" क" ओर से / Respondent By : Dr. Aparna Villuri, Sr. Ar सुनवाई क" तारीख / Date Of Hearing : 24/06/2024 घोषणा क" तारीख/Date Of : 14/08/2024 Pronouncement O R D E R

For Appellant: Sri I. Kama Sastry, ARFor Respondent: Dr. Aparna Villuri, Sr. AR

Section 139(1)Section 142(1)Section 143(2)Section 143(3)Section 80PSection 80P(2)

eligible for deduction U/s 80P of the Act. The Ld. Revenue Authorities relied on various case laws to state that income from interest on securities ear marked to reserve fund has been held not eligible for deduction u/s 80P. The Ld. Revenue Authorities have also placed relied on the decision