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“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
90
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
78
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
76
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

Ketan Arvindbhai Patel, Sojitra vs. Income Tax Officer, Ward-2, Anand

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

ITA 269/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad08 Jul 2024AY 2016-17

Bench: Shri Ramit Kochar (Accountant Member)

For Appellant: Shri Kedar Vyas, A.RFor Respondent: Shri N.J. Vyas, Sr. D.R
Section 139(4)Section 139(5)Section 144Section 250

income filed by the assessee, he has declared Income from Other Sources also (amounting to Rs. 1,83,373, including interest other than interest on securities amounting to Rs. 8,523/-. 2. The assessee has stated that the person named Shri Pankajbhai Shah who was entrusted by him to file

Acegaro Bioscience Limited, Mumbai vs. NFAC, Delhi

In the result, appeal of the assessee is allowed for

ITA 596/MUM/2024[2013-14]Status: DisposedITAT Mumbai28 Jun 2024AY 2013-14
Section 147Section 148

exparte dismissal of the appeal on account of delay and secondly, confirming the additions made by the ld. AO on account of interest on securities and unexplained credit entries in the books of Rs.7,26,245/- and Rs.5,25,750/- respectively. 3. Before us ld. Counsel submitted that the assessee

Janta Adarsh Co-Operative Thrift & Credit Society Ltd., New Delhi vs. ITO, Ward-52(1), New Delhi

In the result, appeal of the assessee is partly allowed

ITA 3693/DEL/2023[2020-21]Status: HeardITAT Delhi28 Jun 2024AY 2020-21

Bench: Shri Kul Bharat

Section 2(19)Section 234BSection 234CSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O ,]] [or interest on securities], any reasonable sum paid by way o f commission o r remuneration to a banker o r any other person for the purpose

The Janta Adarsh Co-Operative Thrift & Credit Society Ltd., Delhi vs. ITO Ward-52(1), Delhi

In the result, appeal of the assessee is partly allowed

ITA 3692/DEL/2023[2018-19]Status: DisposedITAT Delhi28 Jun 2024AY 2018-19

Bench: Shri Kul Bharat

Section 2(19)Section 234BSection 234CSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O ,]] [or interest on securities], any reasonable sum paid by way o f commission o r remuneration to a banker o r any other person for the purpose

Darjeeling District Central Co.Op. Bank Ltd., Darjeeling vs. ACIT(OSD)(TDS)WD-5(3), Darjeeling

In the result, all the appeals of the assessee are allowed

ITA 768/KOL/2023[2017-18]Status: DisposedITAT Kolkata26 Jun 2024AY 2017-18

Bench: Shri Sanjay Garg & Shri Rakesh Mishra

For Appellant: Shri N. C. Mondal, CAFor Respondent: Shri Sailen Samadder, Addl. CIT, Sr. DR
Section 194ASection 194A(3)(v)Section 201Section 201(1)Section 250Section 40

section 194A with effect from 01.06.2015. Prior to the said amendment, the relevant portion of section 194A is reproduced below: “"Interest other than "Interest on Securities" 194A. (1) Any person, not being an individual or Hindu Undivided family, who is responsible for paying to a resident any income ... 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 of a cheque or draft or by any other mode whichever is earlier

Darjeeling District Central Co-Op. Bank Ltd., Darjeeling vs. ACIT, Cir-3(1), Siliguri.

In the result, all the appeals of the assessee are allowed

ITA 767/KOL/2023[2017-18]Status: DisposedITAT Kolkata26 Jun 2024AY 2017-18

Bench: Shri Sanjay Garg & Shri Rakesh Mishra

For Appellant: Shri N. C. Mondal, CAFor Respondent: Shri Sailen Samadder, Addl. CIT, Sr. DR
Section 194ASection 194A(3)(v)Section 201Section 201(1)Section 250Section 40

section 194A with effect from 01.06.2015. Prior to the said amendment, the relevant portion of section 194A is reproduced below: “"Interest other than "Interest on Securities" 194A. (1) Any person, not being an individual or Hindu Undivided family, who is responsible for paying to a resident any income ... 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 of a cheque or draft or by any other mode whichever is earlier

Darjeeling District Central Co-Operative Bank Ltd., Darjeeling vs. ACIT(OSD)(TDS), WD-5(3), Darjeeling

In the result, all the appeals of the assessee are allowed

ITA 766/KOL/2023[2016-17]Status: DisposedITAT Kolkata26 Jun 2024AY 2016-17

Bench: Shri Sanjay Garg & Shri Rakesh Mishra

For Appellant: Shri N. C. Mondal, CAFor Respondent: Shri Sailen Samadder, Addl. CIT, Sr. DR
Section 194ASection 194A(3)(v)Section 201Section 201(1)Section 250Section 40

section 194A with effect from 01.06.2015. Prior to the said amendment, the relevant portion of section 194A is reproduced below: “"Interest other than "Interest on Securities" 194A. (1) Any person, not being an individual or Hindu Undivided family, who is responsible for paying to a resident any income ... 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 of a cheque or draft or by any other mode whichever is earlier

Yadagere Souharda Co-Operative Society Limited., Chikkamagaluru vs. Income Tax Officer, Ward-1, Chikkamagaluru

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

ITA 444/BANG/2024[2018-19]Status: DisposedITAT Bangalore24 Jun 2024AY 2018-19

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Year : 2018-19

For Appellant: Shri Varun Bhat, CAFor Respondent: Shri V. Parithivel, Jt.CIT(DR)(ITAT), Bengaluru
Section 56Section 80PSection 80P(2)(a)

however the assessee did not reply within the stipulated time. The AO also noted that the assessee has received interest other than interest on securities from commission or brokerage, fees for professional/technical services totaling to Rs.31,92,880 from different Page 3 of 12 activities as reported in Form 26AS

Easyaccess Financial Services Ltd, Chennai vs. ITO, Copr Ward 2(1), Chennai

In the result, the appeal filed by the assessee is allowed

ITA 587/CHNY/2024[2012-13]Status: DisposedITAT Chennai14 Jun 2024AY 2012-13

Bench: Shri Mahavir Singhand Shri S.R. Raghunathaआयकर अपील सं./Ita No.: 587/Chny/2024 िनधा"रण वष"/Assessment Year: 2012-13 Easyaccess Financial Services Ltd., The Income Tax Officer, New No.18, Old No.40, Vs. Corporate Ward 2(1), Mussuri Subramaniam Salai, Chennai. (Oliver Road), Mylapore, Chennai – 600 004. Pan: Aabce 4646G (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Ms. M. Lavanya, Fca & Shri Shrenik Chordia, Ca ""यथ" क" ओर से/Respondent By : Shri N. Sanjay Gandhi, Jcit सुनवाई क" तारीख/Date Of Hearing : 13.06.2024 घोषणा क" तारीख/Date Of Pronouncement : 14.06.2024 आदेश /O R D E R Per Mahavir Singh: This Appeal By The Assessee Is Arising Out Of The Order Passed By The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac) In Order No.Itba/Nfac/S/250/2023- 24/1060282095(1) Dated 30.01.2024. The Assessment Was Framed By The Deputy Commissioner Of Income Tax, Corporate Circle 2(1), Chennai For The Assessment Year 2012-13 U/S.143(3) R.W.S.147 Of The Income Tax Act, 1961 (Hereinafter The ‘Act’) Vide Order Dated 27.09.2017. 2. The First Issue In This Appeal Of Assessee Is As Regards To Assumption Of Jurisdiction By The Ao For Reopening Of Assessment U/S.147 R.W.S. 148 Of The Act, As The Ao During The Original Assessment Proceedings Has Formed An Opinion After Seeking Explanation & After Examining The Present Issue Of Factoring Of Income U/S.143(3) Of The Act. Hence, Now Reopening Is Bad In Law. The Assessee Also Raised The Interconnected Issue, Which Is On Merits That The Cit(A) Erred In Confirming The Addition Made By The Ao Beig Factoring Income In The Hands Of The Assessee.

For Appellant: Ms. M. Lavanya, FCA &For Respondent: Shri N. Sanjay Gandhi, JCIT
Section 143(3)Section 147Section 148

Tamilnadu Mercantile Bank Ltd., reported in [2007] 291 ITR 137 has categorically recorded the finding that even after deletion of section 18 of interest on securities, which was taxable only on specified dates when it becomes due for payment and not on accrual basis. The Hon’ble Madras High Court ... method of assessment during the financial years in question, which was unsustainable. Even though Section 18 was deleted, the assessee was taxable for interest on securities only on specified dates when it became due for payment, in view of third proviso to section 145(1) which was in force during

Aurelia Housing Co-Operative Society Ltd., Kolkata vs. ITO, Ward-49(4), Kolkata.

In the result, appeal of the assessee is dismissed

ITA 1138/KOL/2023[2017-18]Status: DisposedITAT Kolkata05 Jun 2024AY 2017-18

Bench: Dr. Manish Borad, Hon’Ble & Shri Pradip Kumar Choubey, Hon’Blei.T.A. No. 1138/Kol/2023 Assessment Year: 2017-18 Aurelia Housing Co-Perative Income Tax Officer, Ward-49(4), Society Ltd. Vs Kolkata Premises No.-30 2222, Plot No. Cd-19 Action Area-I Major Arterial Road New Town Kolkata - 700156 [Pan : Aaaba0803F] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : None Revenue By : Shri Prabhas Roy, Jcit, Sr. D/R सुनवाई क" तारीख/Date Of Hearing : 30/04/2024 घोषणा क" तारीख /Date Of Pronouncement: 05/06/2024 आदेश/O R D E R Per Dr. Manish Borad: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The National Faceless Appeal Centre (Hereinafter The “Ld. Cit(A)”) Dt. 22/08/2023, Passed U/S 250 Of The Income Tax Act, 1961 (“The Act”) For Assessment Year 2017-18. 2. None Appeared On Behalf Of The Assessee. On The Previous Occasion When The Case Was Fixed For Hearing On 07/02/2024 & 23/01/2024, The Assessee Sought Adjournment. Today, There Is No Appearance. We, Therefore, Decide To Adjudicate The Appeal On The Basis Of Available Record & Hearing The Ld. D/R. 3. The Sole Issue Involved In The Instant Appeal Is The Disallowance Of Depreciation Claimed Of Rs. 33,69,260/-. Facts In Brief Are That The 2

For Appellant: NoneFor Respondent: Shri Prabhas Roy, JCIT, Sr. D/R
Section 143(2)Section 2Section 250Section 36Section 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

Indira Ramaiah, Bangalore vs. Income Tax Officer, Ward-1(2)(1), Bangalore

In the result, the appeal of the assessee is dismissed

ITA 507/BANG/2024[2015-16]Status: DisposedITAT Bangalore03 Jun 2024AY 2015-16

Bench: Shri George George K. & Shri Laxmi Prasad Sahuassessment Year : 2015-16

For Appellant: Smt. Suman Lunkar, CAFor Respondent: Ms. Shamala D.D., Addl.CIT(DR)(ITAT), Bengaluru
Section 115BSection 148Section 234ASection 56(2)Section 69

Cash sale of 14,33,573 206CK bullion and jewellery (Section 206C) 3. TDS-194A TDS Statement – Interest other 5,29,974 than interest on securities (Section 194A) 4. TDS- TDS Statement – Payment of 1,55,64,500 194IA(P) consideration for purchase of immovable property (Section 194IA) 3. Notice

M/S Active Securities Limited, New Delhi vs. ITO, New Delhi

The appeals are allowed

ITA 2335/DEL/2016[2012-13]Status: DisposedITAT Delhi27 May 2024AY 2012-13

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharma

For Appellant: Shri Puneet Agarwal, AdvFor Respondent: Shri Kanv Bali, Sr. DR
Section 143(3)Section 143(3)(ii)Section 24

assessment under section 9 cannot be brought within the scope of section 10 of the Income-tax Act. With reference to the interest on securities what the Supreme Court laid down was : "Income from interest on securities falls under section 8 of the Act and not under section ... business of an assessee, interest received from those securities will for the purpose of determining the taxable income be shown under the head "interest on securities" under section 8 read with section 6(ii) of the Act. Similarly, dividends from shares will be shown under section

Rotex Manufacturers and Engineers Pvt Ltd, Rabale, Navi Mumbai vs. DCIT, TDS Circle, Thane, Thane West

In the result, appeal of the assessee is allowed

ITA 4464/MUM/2023[2014-15(Q2)]Status: DisposedITAT Mumbai16 May 2024

Bench: Shri Girish Agrawal & Shri Sunil Kumar Singh

For Appellant: Shri K.P. Kapadia, CAFor Respondent: Smt. Mahita Nair, Sr. DR
Section 154Section 194JSection 197Section 197(2)Section 204

company, the company itself, including the principal officer thereof; (ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including

Rotex Manufacturers and Engineers Pvt Ltd, Rabale, Navi Mumbai vs. DCIT, TDS Circle, Thane, Thane West

In the result, appeal of the assessee is allowed

ITA 4461/MUM/2023[2014-15 (Q3)]Status: DisposedITAT Mumbai16 May 2024

Bench: Shri Girish Agrawal & Shri Sunil Kumar Singh

For Appellant: Shri K.P. Kapadia, CAFor Respondent: Smt. Mahita Nair, Sr. DR
Section 154Section 194JSection 197Section 197(2)Section 204

company, the company itself, including the principal officer thereof; (ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including

Rotex Manufacturers and Engineers Pvt Ltd, Rabale, Navi Mumbai vs. DCIT, TDS Circle, Thane, Thane West

In the result, appeal of the assessee is allowed

ITA 4458/MUM/2023[2014-15(Q4)]Status: DisposedITAT Mumbai16 May 2024

Bench: Shri Girish Agrawal & Shri Sunil Kumar Singh

For Appellant: Shri K.P. Kapadia, CAFor Respondent: Smt. Mahita Nair, Sr. DR
Section 154Section 194JSection 197Section 197(2)Section 204

company, the company itself, including the principal officer thereof; (ii) in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including

Nagapura Credit Co Operative Society, Bangalore vs. Income Tax Officer, Ward-6(2)(1), Bangalore

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

ITA 226/BANG/2024[2020-21]Status: DisposedITAT Bangalore14 May 2024AY 2020-21

Bench: Smt. Beena Pillai & Shri Waseem Ahmed

For Appellant: Shri Gireesha T.L, C.AFor Respondent: Shri Muthu Shankar, Addl. CIT (DR)
Section 80PSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [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

Nagapura Credit Co Operative Society, Bangalore vs. Income Tax Officer, Ward-6(2)(1), Bangalore

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

ITA 225/BANG/2024[2018-19]Status: DisposedITAT Bangalore14 May 2024AY 2018-19

Bench: Smt. Beena Pillai & Shri Waseem Ahmed

For Appellant: Shri Gireesha T.L, C.AFor Respondent: Shri Muthu Shankar, Addl. CIT (DR)
Section 80PSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [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

Nagapura Credit Co Operative Society, Bangalore vs. Income Tax Officer, Ward-6(2)(2), Bangalore

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

ITA 224/BANG/2024[2017-18]Status: DisposedITAT Bangalore14 May 2024AY 2017-18

Bench: Smt. Beena Pillai & Shri Waseem Ahmed

For Appellant: Shri Gireesha T.L, C.AFor Respondent: Shri Muthu Shankar, Addl. CIT (DR)
Section 80PSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [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

Nagapura Credit Co Operative Society, Bangalore vs. Income Tax Officer, Ward-6(2)(1), Bangalore

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

ITA 223/BANG/2024[2016-17]Status: DisposedITAT Bangalore14 May 2024AY 2016-17

Bench: Smt. Beena Pillai & Shri Waseem Ahmed

For Appellant: Shri Gireesha T.L, C.AFor Respondent: Shri Muthu Shankar, Addl. CIT (DR)
Section 80PSection 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [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

M/S. Neeladri Pattina Souharda Sahakari Sangha Niyamita Manvi, Raichur vs. Income Tax Officer, Ward-1, Raichur

In the result, the appeal of the assessee stands allowed for statistical purpose

ITA 477/BANG/2024[2020-21]Status: DisposedITAT Bangalore13 May 2024AY 2020-21

Bench: Smt. Beena Pillai & Shri Waseem Ahmedassessment Year : 2020-21

For Appellant: Smt. Sunaiana Bhatia, AdvocateFor Respondent: Shri Ganesh R Gale, Standing Counsel for Department (DR)
Section 80P(2)(a)Section 80P(2)(d)

after making the following deductions, namely:— (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [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