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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

Dell India P Ltd, Bangalore vs. Income Tax Officer(TDS), Ltu, Bangalore

In the result the appeals filed by assessee and revenue for A

ITA 1644/BANG/2014[2012-13]Status: DisposedITAT Bangalore25 Mar 2022AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillai

Section 201

mandates the tax deductor to deduct "income-tax" on "any income by way of interest other than income by way of interest on securities". The phrase "any income" and "income-tax thereon" if read harmoniously, it would indicate that the interest which finally partakes the character of income, alone

M/S Volvo India Pvt Ltd, Bangalore vs. Income Tax Officer(TDS), Bangalore

ITA 1195/BANG/2014[2012-13]Status: DisposedITAT Bangalore25 Mar 2022AY 2012-13

Bench: Shri George George K & Ms. Padmavathy S

For Appellant: Shri S Parthasarthy, AdvocateFor Respondent: Smt. Priyadarshini Besaganni, JCIT(DR)
Section 194CSection 194HSection 194ISection 194JSection 195Section 201Section 201(1)Section 40

Income-tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order ... Hindu Undivided family, who is 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 payee or at the time of payment thereof in cash

M/S. Toyota Kirloskar Motor Private Limited, Ramanagar vs. Income Tax Officer, (TDS), Ltu, Bangalore

ITA 2392/BANG/2019[2011-12]Status: DisposedITAT Bangalore23 Mar 2022AY 2011-12

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranita No.2391 & 2392/Bang/2019 Assessment Years : 2010-11 & 2011-12

For Appellant: Shri Padamchand Khincha, A.RFor Respondent: Shri Sumer Singh Meena, D.R
Section 154Section 190Section 201Section 201(1)Section 37Section 40

Income-tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order ... Hindu Undivided family, who is 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 payee or at the time of payment thereof in cash

M/S. Toyota Kirloskar Motor Private Limited, Ramanagar vs. Income Tax Officer, (TDS), Ltu, Bangalore

ITA 2391/BANG/2019[2010-11]Status: DisposedITAT Bangalore23 Mar 2022AY 2010-11

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranita No.2391 & 2392/Bang/2019 Assessment Years : 2010-11 & 2011-12

For Appellant: Shri Padamchand Khincha, A.RFor Respondent: Shri Sumer Singh Meena, D.R
Section 154Section 190Section 201Section 201(1)Section 37Section 40

Income-tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order ... Hindu Undivided family, who is 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 payee or at the time of payment thereof in cash

DCIT 2(2), Mumbai vs. State Bank of India, Mumbai

ITA 4951/MUM/2013[2005-06]Status: DisposedITAT Mumbai22 Mar 2022AY 2005-06

Bench: Shri M. Balaganesh & Shri Kuldip Singhassessment Year: 2005-06 M/S. State Bank Of India, Dcit, Financial Reporting & Circle -2(2), Taxation Dept., Mumbai 3Rd Floor, Vs. Corporate Centre, Madam Cama Road, Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent) Assessment Year: 2005-06 Office Of The Dcit-2(2), M/S. State Bank Of India, R.No.545, Central Office, Aayakar Bhavan, Accounts & Compliance M.K. Road, Dept., Vs. 14Th Floor, Mumbai- 400 020 Madam Cama Rd., Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent)

For Appellant: Shri Ketan Ved, A.RFor Respondent: Shri Anand Mohan, D.R
Section 14Section 14ASection 36Section 41(4)

facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the taxing of interest on securities on due basis, ignoring the fact that the assessee bank has been following Mercantile System of accounting and therefore, interest on securities is to be accounted ... Revenue’s appeal (ITA No.4951/M/2013) A.Y. 2005-06 51. Revenue has come up before the Tribunal by challenging the allowance of taxing of interest on securities on due basis on the ground that the assessee bank has been following mercantile system of accounting and as such interest on securities

State Bank of India, Mumbai vs. DCIT Cir 2(2), Mumbai

ITA 3685/MUM/2013[2005-06]Status: DisposedITAT Mumbai22 Mar 2022AY 2005-06

Bench: Shri M. Balaganesh & Shri Kuldip Singhassessment Year: 2005-06 M/S. State Bank Of India, Dcit, Financial Reporting & Circle -2(2), Taxation Dept., Mumbai 3Rd Floor, Vs. Corporate Centre, Madam Cama Road, Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent) Assessment Year: 2005-06 Office Of The Dcit-2(2), M/S. State Bank Of India, R.No.545, Central Office, Aayakar Bhavan, Accounts & Compliance M.K. Road, Dept., Vs. 14Th Floor, Mumbai- 400 020 Madam Cama Rd., Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent)

For Appellant: Shri Ketan Ved, A.RFor Respondent: Shri Anand Mohan, D.R
Section 14Section 14ASection 36Section 41(4)

facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the taxing of interest on securities on due basis, ignoring the fact that the assessee bank has been following Mercantile System of accounting and therefore, interest on securities is to be accounted ... Revenue’s appeal (ITA No.4951/M/2013) A.Y. 2005-06 51. Revenue has come up before the Tribunal by challenging the allowance of taxing of interest on securities on due basis on the ground that the assessee bank has been following mercantile system of accounting and as such interest on securities

Biocon Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Ltu, Bangalore

ITA 1248/BANG/2014[2012-13]Status: DisposedITAT Bangalore21 Mar 2022AY 2012-13

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranassessment Year : 2012-13

For Appellant: Shri Padamchand Khincha, A.RFor Respondent: Shri Sumer Singh Meena, D.R
Section 190Section 201Section 201(1)Section 40

Income-tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order ... Hindu Undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, Biocon Ltd., Bangalore Page 15 of 30 at the time of credit of such income to the account of payee

Karnataka Vikas Grameen Bank, Dharwad vs. Income Tax Officer, TDS Ward-1, Hubli

In the result, ITA Nos.1526 & 1527/Bang/2017 are allowed, while

ITA 1529/BANG/2017[2011-12]Status: DisposedITAT Bangalore28 Feb 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ravishankar, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru
Section 200Section 201(1)Section 250Section 254

paid by a branch of banking company. The first proviso of sub sec. 3 of sec. 194A reads as under:- “Interest other than "Interest on securities 194A. (1) Any person, 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

Karnataka Vikas Grameen Bank, Dharwad vs. Income Tax Officer, TDS Ward-1, Hubli

In the result, ITA Nos.1526 & 1527/Bang/2017 are allowed, while

ITA 1528/BANG/2017[2010-11]Status: DisposedITAT Bangalore28 Feb 2022AY 2010-11

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ravishankar, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru
Section 200Section 201(1)Section 250Section 254

paid by a branch of banking company. The first proviso of sub sec. 3 of sec. 194A reads as under:- “Interest other than "Interest on securities 194A. (1) Any person, 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

Karnataka Vikas Grameen Bank, Dharwad vs. Income Tax Officer, Ts Ward-1, Hubli

In the result, ITA Nos.1526 & 1527/Bang/2017 are allowed, while

ITA 1527/BANG/2017[2009-10]Status: DisposedITAT Bangalore28 Feb 2022AY 2009-10

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ravishankar, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru
Section 200Section 201(1)Section 250Section 254

paid by a branch of banking company. The first proviso of sub sec. 3 of sec. 194A reads as under:- “Interest other than "Interest on securities 194A. (1) Any person, 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

Karnataka Vikas Grameen Bank, Dharwad vs. Income Tax Officer, TDS Ward-1, Hubli

In the result, ITA Nos.1526 & 1527/Bang/2017 are allowed, while

ITA 1526/BANG/2017[2008-09]Status: DisposedITAT Bangalore28 Feb 2022AY 2008-09

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Ravishankar, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru
Section 200Section 201(1)Section 250Section 254

paid by a branch of banking company. The first proviso of sub sec. 3 of sec. 194A reads as under:- “Interest other than "Interest on securities 194A. (1) Any person, 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

Mr.M J Aravind, Bangalore vs. Assistant Commissioner of Income Tax Circle-2(3)(1), Bangalore

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

ITA 222/BANG/2019[2011-12]Status: DisposedITAT Bangalore25 Feb 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2011-12

For Appellant: Shri Narendra Sharma, AdvocateFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 147Section 148Section 14ASection 48Section 57

such income under the head 'income from other sources' is allowable. In addition to that, in respect of income excluding exempt income being interest on securities, any reasonable sum paid by way of commission or remuneration to banker or any other person for the purpose of realising such dividend

Breach Candy Swimming Bath Trust, Mumbai vs. DCIT Cent. Cir 5(3), Mumbai

In the result, the assessee appeal

ITA 2469/MUM/2021[2014-15]Status: DisposedITAT Mumbai24 Feb 2022AY 2014-15

Bench: Shri S Rifaur Rahman & Shri Pavan Kumar Gadale & Breach Candy Vs. Dcit, Cc5(3) Swimming Bath Trust Room No. 1906, 19Th 66, Bhulabhai Desai Floor, Air India Bldg, Road, Breach Candy, Nariman Point, Mumbai – 400026. Mumbai – 400021. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaatb0133F Appellant .. Respondent Appellant By : Shri.Rajeev Waglay Adv. Ar Respondent By : Shri.Dilip Kumar Shah & Shri.Mahesh Akhade. Dr Date Of Hearing 18.01.2022 Date Of Pronouncement 27.01.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: These Are The Appeals Filed By The Assessee Against The Separate Orders Of The Commissioner Of Income Tax (Appeals)- 53, Mumbai Passed U/Sec144 R.W.S147 & 250 Of The Act (A.Y.2014-15) & U/Sec 143(3)R.W.S147 & 250 Of The Income Tax Act, 1961 (A.Y.2015-16). Since The Issues Involved In These Appeals Are Identical & Inter Connected, Hence Are Clubbed, Heard & Consolidated Order Is Passed.

For Appellant: Shri.Rajeev Waglay Adv. ARFor Respondent: Shri.Dilip Kumar Shah &
Section 11Section 12ASection 143(3)Section 148Section 2(15)

extent of Rs.3,30,98,466/- and deleted the addition and observed that the balance of the interest on securities- bonds does not pertain to the F.Y 2014-15 and confirmed the addition to the extent of Rs.1,22,81,315/- and partly allowed the ground of appeal

ITO 25(2)(5), Mumbai vs. Kirit Raojibhai Patel, Mumbai

In the result appeal of the learned AO is dismissed

ITA 2339/MUM/2017[2007-08]Status: DisposedITAT Mumbai14 Feb 2022AY 2007-08

Bench: Sri Prashant Maharishi, Am & Sri Pavan Kumar Gadale, Jm The Income Tax Officer- Kirit Raojibhai Patel 25(2)(5) 5Th Floor Ram Niwas, 34, Room No. 506, C-10, Vallabhnagar, N.S. Road, Vs. Pratyakshakar Bhavan, Bkc, Juhu, Vile Parele(W), Mumbai-400 051 Mumbai-400 049 (Appellant) (Respondent) Pan No. Aabpp3139J Assessee Represented By : Shri Rashmikant Choksey, Ar Department Represented By : Shri K.K. Mishra, Cit Dr Date Of Hearing: 08.12.2021 Date Of Pronouncement : 14.02.2022

Section 143(3)Section 148Section 2Section 45Section 50Section 54Section 54F

purposes of charge of income tax and computation of total income be classified under six heads of income," namely:— (A) Salaries; (B) Interest on Securities; (C) Income from house property; (D) Profits and gains of business or profession; (E) Capital gains; (F) Income from other sources unless otherwise, provided

M/S Herbalife International India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 3168/BANG/2018[2015-16]Status: DisposedITAT Bangalore09 Feb 2022AY 2015-16

Bench: Shri N V Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT-I(DR)(ITAT), Bengaluru
Section 143(3)

Income- tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order

Assistant Commissioner of Income Tax, Circle-3(1)(2), Bengaluru vs. M/S Herbal Life International India Pvt Ltd, Bengaluru

ITA 2587/BANG/2017[2013-14]Status: DisposedITAT Bangalore09 Feb 2022AY 2013-14

Bench: Shri N V Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT-I(DR)(ITAT), Bengaluru
Section 143(3)

Income- tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order

M/S Herbalife International India Pvt Ltd, Bangalore vs. Assistant Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 2220/BANG/2017[2014-15]Status: DisposedITAT Bangalore09 Feb 2022AY 2014-15

Bench: Shri N V Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT-I(DR)(ITAT), Bengaluru
Section 143(3)

Income- tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order

M/S Herbalife International India Pvt Ltd, Bangalore vs. Assistant Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 2219/BANG/2017[2013-14]Status: DisposedITAT Bangalore09 Feb 2022AY 2013-14

Bench: Shri N V Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT-I(DR)(ITAT), Bengaluru
Section 143(3)

Income- tax Act, tax has to be deducted at source by the person responsible for making any payment in the nature of interest on securities at the time of payment. The liability to deduct tax at source was being postponed by making a provision for such payment. In order

Walkeshwar Chandanbala Co-Op. Housing Society Ltd., Mumbai vs. CPC Ward No19(3)(1), Bangalore

ITA 849/MUM/2021[2019-20]Status: DisposedITAT Mumbai10 Jan 2022AY 2019-20

Bench: Shri Shamim Yahya

Section 143(1)Section 250Section 80PSection 80P(2)Section 80P(2)(d)

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

Deputy Commissioner of Income Tax (Exemptions), Circle-1, Bengaluru vs. Karnataka Industrial Areas Development Board, Bengaluru

In the result, both the appeals filed by revenue are dismissed

ITA 578/BANG/2021[2010-11]Status: DisposedITAT Bangalore05 Jan 2022AY 2010-11

Bench: Shri. Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri
Section 11Section 11(1)(a)Section 143(3)Section 2(15)

Circular No. 5-P (LXX-6) of 1968, dated July 19, 1968, reads : "Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word 'income' should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof