Commissioner Of Income Tax, Mumbaicity-Iii, Mumbai v. M/S.scci Ltd. Now Mergedwith M/S.icici Ltd

gopi IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INTEREST TAX APPEAL LODGING NO.939 OF 2003 Commissioner of Income Tax, MumbaiCity-III, Mumbai, Vs. ..Appellant M/s.SCCI Ltd. now mergedwith M/s.ICICI Ltd. ...Respondents Mr.Sureshkumar for the appellant.Mr. S.P. Mehta for respondents. P.C. CORAM : MOHIT S. SHAH, C.J. & M.S. SANKLECHA, J.DATE : 31 July 2013 In this appeal challenging the order dated 20 February 2003 of the Income Tax Appellate Tribunal, Mumbai, the Revenue has sought to raise the following substantial question of law:- “Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal erred in deleting the addition of Rs.1,673,97,982/- from the taxable interest income of the assessee, the same being the interest earned by the assessee from the bonds and government securities? 2.The relevant assessment year is 1993-94. 3.The Tribunal in the impugned order has held that the interest earned by the assessee on securities, bonds and debentures is not cahargeable to tax under the Interest Tax Act 1974 as it falls outside the ken of the interest referred to in Section 2(7) of the Act. 4.The view taken by the Tribunal in favour of the assessee has been confirmed not only by this Court, but also by the Supreme Court in Commissioner of Income Tax vs. Corporation Bank (2007) 295 ITR 193 (SC)and also in subsequent judgments including CIT vs. SaharaIndia Savings and Investment Corporation Ltd. (2010) 321 ITR 372(SC). While in Corporation Bank's case the Supreme Court expressed the view that there is a basic difference between loans and advances on the one hand and investments/securities on the other. The difference is indicated in the provisions of the Income Tax Act, the Companies Act as well as the Banking Regulation Act. 5.In CTI vs. Sahara India Savings and Investment Corporation Ltd. (supra) the Supreme Court again examined this question at great length and held that on reading Section 2(7) of the Interest Tax Act 1974 as a whole, it is clear that “interest on investments” is not taxable as interest under Section 2(7) of the said 1974 Act. The Supreme Court held that the interest on bonds and debentures bought by an assessee as and by way of “investment” is not covered within the definition of interest under Section 2(7) of the Act. 6.In view of the above decision of the Apex Court, the impugned order of the Income Tax Appellate Tribunal does not give rise to any substantial question of law. Consequently the appeal is dismissed with no order as to costs. CHIEF JUSTICE M.S. SANKLECHA, J