Law: Income Tax Act, 1961

Section: 256

(a) Income-tax----Reference---Question decided by three High Courts---No appeal to Supreme Court in all three cases---Question cannot be referred---Indian Income Tax Act, 1961 , 5.256. (b) Income-tax--- ----Reference---Interest-tax---Interest---Finding of Tribunal that transaction by Bank of borrowing money from Agricultural Development and Refinance Corporation and Industrial Development Bank of India and lending it to its constituents constituted an integrated transaction--­Finding of fact---Tribunal justified in holding that only net interest was taxable---No question of law arose from its order---Indian Income Tax Act, 1961, S.256---Indian Interest Tax Act, 1974. Held, (i) that in respect of the sum of Rs. 19,726 the order of the Tribunal was in accordance with the law that had been declared in three decisions, viz., CIT v. State Bank of Indore (1988) 172 ITR 24 (MP); CIT v. Canara Bank (1989) 175 ITR 60 (Kar.) and CIT v. Federal Bank Ltd. (1991) 189 ITR 117 (Ken.). It was not the case of the Revenue that any of those decisions bad-been taken up in appeal to the Supreme Court or that in any other matter the ratio laid down in the aforementioned decisions had been reversed by the Supreme Court. In the circumstances, it was unnecessary to call for a reference merely for the purpose of reiterating the law which had been declared and also accepted the Revenue. (ii) That as regards the second question, the Tribunal had found that the transaction was as integrated one. The monies lent by the assessee­ bank to its constituents were monies which originated from the Industrial Development Bank of India which in turn had been made available to the Agricultural Development Refinance Corporations on certain conditions for the purpose of making the monies available through banks. The interest had to be paid by the ultimate borrowers as also by the tending Bank, as stipulated in the agreement. The assessee bank had entered into an agreement with the Agricultural Development Refinance Corporation and the, I.D.B.I. in accordance with the agreement that was entered into between the Agricultural Development Refinance Corporation and the I.D.B.I. The transaction commencing…

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