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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

DCIT (TDS)(OSD) - 2(3), Mumbai vs. M/S. Wockhardt Ltd., Mumbai

In the result, the appeal filed by the Revenue is dismissed

ITA 2131/MUM/2022[2014-15]Status: DisposedITAT Mumbai30 Dec 2022AY 2014-15

Bench: Shri Aby T Varkey () & Shri Om Prakash Kant () Assessment Year: 2014-15 Dcit (Tds) (Osd)-2(3), M/S Wockhardt Ltd., Room No. 310, 3Rd Floor, Mtnl Wockhardt Towers, Bandra Building, Cumballa Hill, Vs. Kurla Complex, Mumbai-400026. Mumbai-400051. Pan No. Aaacw 2472 M Appellant Respondent : Assessee By Mr. Pranay Gandhi, Ar : Revenue By Mr. Byomakesh Pradipta Kumar Panda, Cit-Dr : Date Of Hearing 20/12/2022 : Date Of Pronouncement 30/12/2022

For Respondent: Assessee by Mr. Pranay Gandhi, AR
Section 194H

follows : 8. The provisions of section 194A reads as follows : 8. The provisions of section 194A reads as follows :— "194A. Interest other than "Interest on securities". "194A. Interest other than "Interest on securities". "194A. Interest other than "Interest on securities".—(1) Any persons. Not being an individual or a Hindu

DCIT (TDS)-2(3), Mumbai vs. Wockhardt Limited, Mumbai

Appeal is dismissed

ITA 2314/MUM/2022[2013-14]Status: DisposedITAT Mumbai20 Dec 2022AY 2013-14

Bench: Shri Kuldip Singh & Shri S. Rifaur Rahmanassessment Year: 2013-14

For Appellant: Shri Vallabh Gokhale, A.RFor Respondent: Shri Byomakesh Pradipta Kumar Panda, D.R
Section 133ASection 194ASection 194HSection 201Section 201(1)

defined under section 2(28A) of the Income-tax Act. 8. The provisions of section 194A reads as follows :— "194A. Interest other than "Interest on securities".—(1) Any persons. Not being an individual or a 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

Bhairabnala Samabay Krishi Unnayan Samity Limited, Kalna vs. ITO, Ward-1(1), Burdwan

In the result, the appeal of assessee is allowed

ITA 111/KOL/2022[2017-18]Status: DisposedITAT Kolkata15 Dec 2022AY 2017-18
Section 143(2)Section 154Section 250Section 80PSection 80P(2)(a)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 or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an "urban consumers' co- operative society" means a society

ACIT, Circle-14(1)(1), Mumbaiq vs. M/S Kotak Mahindra Life Insurance Company Ltd, Mumbai

In the result, the appeal of the Revenue is dismis

ITA 2449/MUM/2022[2018-2019]Status: DisposedITAT Mumbai30 Nov 2022AY 2018-2019

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2018-19 Acit-14(1)(1), M/S. Kotak Mahindra Life Room No. 432, 4Th Floor, Aayakar Insurance Company Ltd Bhavan, M.K.Road Vs. 2Nd Floor, 12 Bkc, Mumbai-400020. Bandra Kurla Complex Mumbai-400 051 Pan No. Aaaco3983B Appellant Respondent Assessee By : Shri. Madhur Agrawal, Adv. Revenue By : Smt. Madhumalti Ghosh, Cit Dr : Date Of Hearing 23/11/2022 Date Of Pronouncement : 30/11/2022

For Appellant: Shri. Madhur Agrawal, AdvFor Respondent: Smt. Madhumalti Ghosh, CIT DR
Section 14A

only First Schedule will apply for computing incomes only First Schedule will apply for computing incomes and excludes other heads of income like, Interest on Securities, income and excludes other heads of income like, Interest on Securities, income and excludes other heads of income like, Interest on Securities, income from

Tata Industries Ltd, Mumbai vs. Dy CIT Circle- 2 (3)(1), Mumbai

In the result, the appeal of the assessee is allowed and appeal of the revenue is partly allowed

ITA 217/MUM/2020[2016-17]Status: DisposedITAT Mumbai29 Nov 2022AY 2016-17
Section 115Section 115BSection 143(3)Section 80G

different heads for the purpose of computation of the net income of the assessee. Though for the purpose of computation of the income, interest on securities is separately classified, income by way of interest from securities does not cease to be part of the income from business if the securities

JCIT (OSD) (TDS)-2(3). Mumbai, Mumbai vs. M/S Wockhardt Ltd, Mumbai

In the result, the appeal by the Revenue for the assessment year 2012–

ITA 894/MUM/2022[2011-12]Status: DisposedITAT Mumbai21 Nov 2022AY 2011-12

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Pranay GandhiFor Respondent: Shri A.B. Koli
Section 133ASection 194ASection 194HSection 201Section 201(1)Section 250

defined under section 2(28A) of the Income-tax Act. 8. The provisions of section 194A reads as follows :— "194A. Interest other than "Interest on securities".—(1) Any persons. Not being an individual or a 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

JCIT (OSD) (TDS)-2(3), Mumbai. vs. M/S Wockhardt Ltd, Mumbai

In the result, the appeal by the Revenue for the assessment year 2012–

ITA 893/MUM/2022[2012-13]Status: DisposedITAT Mumbai21 Nov 2022AY 2012-13

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Pranay GandhiFor Respondent: Shri A.B. Koli
Section 133ASection 194ASection 194HSection 201Section 201(1)Section 250

defined under section 2(28A) of the Income-tax Act. 8. The provisions of section 194A reads as follows :— "194A. Interest other than "Interest on securities".—(1) Any persons. Not being an individual or a 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

Tata Aia Life Insurance Company Limited, Mumbai vs. Principle Comm. of Income Tax, Rane-8, Mumbai

In the result, appeal of the assessee is allowed

ITA 1285/MUM/2022[2017-2018]Status: DisposedITAT Mumbai31 Oct 2022AY 2017-2018
Section 115Section 143(3)Section 253Section 263Section 44

under "Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources, or in section 199 or in sections 28 to 438, the profits ... business only. More over 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

Assistant Commissioner of Income Tax - Circle 2(3)(2), Mumbai vs. Indusind Bank Limited, Mumbai

ITA 2726/MUM/2019[2015-16]Status: DisposedITAT Mumbai26 Oct 2022AY 2015-16
Section 143(3)

income from other sources." 2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head "Income from Other Sources", if, the income is not chargeable to income-tax under ... 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

Assistant Commissioner of Income Tax - Circle 2(3)(2), Mumbai vs. Indusind Bank Limited, Mumbai

ITA 2725/MUM/2019[2014-15]Status: DisposedITAT Mumbai26 Oct 2022AY 2014-15
Section 143(3)

income from other sources." 2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head "Income from Other Sources", if, the income is not chargeable to income-tax under ... 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

Indusind Bank Limited, Mumbai vs. Assistant Commissioner of Income Tax - Circle 2(3)(2), Mumbai

ITA 2676/MUM/2019[2015-16]Status: DisposedITAT Mumbai26 Oct 2022AY 2015-16
Section 143(3)

income from other sources." 2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head "Income from Other Sources", if, the income is not chargeable to income-tax under ... 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

Indusind Bank Limited, Mumbai vs. Assistant Commissioner of Income Tax - Circle 2(3)(2), Mumbai

ITA 2675/MUM/2019[2014-15]Status: DisposedITAT Mumbai26 Oct 2022AY 2014-15
Section 143(3)

income from other sources." 2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head "Income from Other Sources", if, the income is not chargeable to income-tax under ... 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

M/S. Bhavasar Kshatriya Co-Operative Credit Society Limited, Hubballi vs. Assistant Director of Income Tax, CPC, Bangalore

In the result, all the three appeals filed by assessee stands allowed for statistical purposes

ITA 583/BANG/2022[2019-20]Status: DisposedITAT Bangalore19 Oct 2022AY 2019-20

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Appeal No. Appellant Respondent Year The Income-Tax

For Appellant: Smt. Pratibha, Advocate
Section 56Section 57Section 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. Bhavasar Kshatriya Co-Operative Credit Society Limited, Hubballi vs. Income Tax Officer Ward-1(1), Hubballi

In the result, all the three appeals filed by assessee stands allowed for statistical purposes

ITA 582/BANG/2022[2017-18]Status: DisposedITAT Bangalore19 Oct 2022AY 2017-18

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Appeal No. Appellant Respondent Year The Income-Tax

For Appellant: Smt. Pratibha, Advocate
Section 56Section 57Section 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. Bhavasar Kshatriya Co-Operative Credit Society Limited, Hubballi vs. Income Tax Officer Ward-3(3), Hubballi

In the result, all the three appeals filed by assessee stands allowed for statistical purposes

ITA 581/BANG/2022[2015-16]Status: DisposedITAT Bangalore19 Oct 2022AY 2015-16

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Appeal No. Appellant Respondent Year The Income-Tax

For Appellant: Smt. Pratibha, Advocate
Section 56Section 57Section 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

Life Insurance Corporation of India, Mumbai vs. Dy.Commissioner of Income Tax-3(2)(1), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1714/MUM/2022[2013-14]Status: DisposedITAT Mumbai29 Sept 2022AY 2013-14

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blelife Insurance Corporation Of India V. Dcit – 3(2)(1) Central Office, F&A Department Room No. 608 3Rd Floor, West Wing Aayakar Bhavan, M.K. Road “Yogakshema” Jeevan Bima Marg Mumbai - 400020 Mumbai - 400021 Pan: Aaacl0582H Appellant Respondent Acit – 3(2)(1) V. M/S. Life Insurance Corporation Of India Central Office Room No. 674, 6Th Floor “Yogakshema” Jeevan Bima Marg Aayakar Bhavan, M.K. Road Nariman Point, Mumbai - 400021 Mumbai - 400020 Pan: Aaacl0582H Appellant Respondent

Section 115Section 44Section 80G

Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains ... obstinate’ clause which overrides the provisions of the Act relating to computation of income chargeable to tax under the head: (i) Interest on Securities; (ii) Income from House Property; (iii) Capital Gains; (iv) Income from other sources. (v) Profits & Gains of business (Section 28 to 43B) Apart from above

ACIT-3(2)(1), Mumbai vs. M/S Life Insurance Corporation of India, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1710/MUM/2022[2013-2014]Status: DisposedITAT Mumbai29 Sept 2022AY 2013-2014

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blelife Insurance Corporation Of India V. Dcit – 3(2)(1) Central Office, F&A Department Room No. 608 3Rd Floor, West Wing Aayakar Bhavan, M.K. Road “Yogakshema” Jeevan Bima Marg Mumbai - 400020 Mumbai - 400021 Pan: Aaacl0582H Appellant Respondent Acit – 3(2)(1) V. M/S. Life Insurance Corporation Of India Central Office Room No. 674, 6Th Floor “Yogakshema” Jeevan Bima Marg Aayakar Bhavan, M.K. Road Nariman Point, Mumbai - 400021 Mumbai - 400020 Pan: Aaacl0582H Appellant Respondent

Section 115Section 44Section 80G

Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains ... obstinate’ clause which overrides the provisions of the Act relating to computation of income chargeable to tax under the head: (i) Interest on Securities; (ii) Income from House Property; (iii) Capital Gains; (iv) Income from other sources. (v) Profits & Gains of business (Section 28 to 43B) Apart from above

Life Insurance Corporation of India, Mumbai vs. Deputy Commissioner of Income Tax-3(2)(1), Mumbai

ITA 1671/MUM/2022[2010-2011]Status: DisposedITAT Mumbai29 Sept 2022AY 2010-2011

Bench: Shri Kuldip Singh & Shri S. Rifaur Rahmanassessment Year: 2010-11 M/S. Life Insurance Dcit 3(2)(1), Corporation Of India, Room No.608, Central Office, Aayakar Bhavan, F&A Department, Maharshi Karve Road, Vs. 3Rd Floor, West Wing, New Marine Lines, “Yogakshema”, Mumbai - 400020 Jeevan Bima Marg, Mumbai – 400 021 Pan: Aaacl0582H (Appellant) (Respondent) Assessment Year: 2010-11 Acit 3(2)(1), M/S. Life Insurance Room No.674, 6Th Floor, Corporation Of India, Aayakar Bhavan, Central Office, M.K. Road, Vs. Yogakshema, Mumbai - 400020 Jeevan Bima Marg, Nariman Point, Mumbai – 400 005 Pan: Aaacl0582H (Appellant) (Respondent)

For Appellant: Shri Anish Thacker, A.RFor Respondent: Shri Jagadish Jangid, D.R
Section 147Section 14ASection 250Section 44Section 80G

Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains ... obstinate’ clause which overrides the provisions of the Act relating to computation of income chargeable to tax under the head: (i) Interest on Securities; ITA No.1671/M/2022 & 11 M/s. Life Insurance Corporation of India (ii) Income from House Property; (iii) Capital Gains; (iv) Income from other sources. (v) Profits & Gains

Asst. Comm of Income Tax 3(2) (1), Mumbai vs. Life Insurance Corporation of India, Mumbai

ITA 1566/MUM/2022[2010-11]Status: DisposedITAT Mumbai29 Sept 2022AY 2010-11

Bench: Shri Kuldip Singh & Shri S. Rifaur Rahmanassessment Year: 2010-11 M/S. Life Insurance Dcit 3(2)(1), Corporation Of India, Room No.608, Central Office, Aayakar Bhavan, F&A Department, Maharshi Karve Road, Vs. 3Rd Floor, West Wing, New Marine Lines, “Yogakshema”, Mumbai - 400020 Jeevan Bima Marg, Mumbai – 400 021 Pan: Aaacl0582H (Appellant) (Respondent) Assessment Year: 2010-11 Acit 3(2)(1), M/S. Life Insurance Room No.674, 6Th Floor, Corporation Of India, Aayakar Bhavan, Central Office, M.K. Road, Vs. Yogakshema, Mumbai - 400020 Jeevan Bima Marg, Nariman Point, Mumbai – 400 005 Pan: Aaacl0582H (Appellant) (Respondent)

For Appellant: Shri Anish Thacker, A.RFor Respondent: Shri Jagadish Jangid, D.R
Section 147Section 14ASection 250Section 44Section 80G

Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains ... obstinate’ clause which overrides the provisions of the Act relating to computation of income chargeable to tax under the head: (i) Interest on Securities; ITA No.1671/M/2022 & 11 M/s. Life Insurance Corporation of India (ii) Income from House Property; (iii) Capital Gains; (iv) Income from other sources. (v) Profits & Gains

DCIT-2(2)(1), Mumbai vs. M/S State Bank of India (Successor to State Bank of Bikaner and Jaipur), Mumbai

In the result, the appeal of the Revenue is dismissed, whereas the appeal of the assessee is allowed partly for statistical purposes

ITA 3033/MUM/2019[2015-16]Status: DisposedITAT Mumbai29 Sept 2022AY 2015-16

Bench: Shri Om Prakash Kant (Account Member) & Ms. Kavitha Rajagopal () I.T.A. No. 3033/Mum/2019 (A.Y. 2015-16) I.T.A. No. 2873/Mum/2019 (A.Y. 2015-16) Dcit-2(2)(1), Vs. M/S State Bank Of India Mumbai (Successor To State Room No. 545, Bank Of Bikaner & 5Th Floor, Ayakar Jaipur) Bhavan Financial Reporting & Mumbai-400020 Taxation, 3Rd Floor, Corporate Centre, Madam Cama Road Nariman Point, Mumbai- 400021 (Appellant) (Respondent)

Section 14A

taxed on the due basis only without appreciating that as per the mercantile system of accounting followed by the assesse, interest on securities has to be taxed on accrual basis.". 2."On the facts and circumstances of the case and in Iaw, the Ld. CIT(A) has erred in allowing ... 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