Law: Income Tax Act, 1961

Section: 19,20,X1(1),154

Income-tax----Business expenditure---Banking company---Interest on securities--­Rectification of mistake---Purchase and sale of securities in course of business of banking---Securities held as stock-in-trade---Interest paid for broken period on purchase of securities---Deductible as business expenditure---Rectification to disallow deduction---Not justified---Indian Income Tax Act, 1961, Ss. 19, 20, X1(1) & 154--- CBDT Circular No.599, dated 24-4-1991. Per G. Sivarjan and P.A. Mohammed JJ (P. Shanmugam, J. dissenting): Section 20(1) of the Income Tax Act, 1961 (before omission with effect from April 1, 1988), dealt with quantum of the deductions provided under the head "Interest on securities" in the case of a banking' company. Subsection(2) of section 20 provides that the expenses deducted under clauses (i) and (ii) of subsection (1) shall not again form part of the deductions admissible under sections 30 to 37 for the purpose of computing the income of the company under the head "Profits and gains of business or profession". This provision; is a Positive indication in a negative form that the expenses/loss incurred for the purposes and incidental to the business though not specifically provided for, are a permissible deduction in the computation of total income from, business of a banking company. Sub­section (2) makes it clear that the deductions from interest on securities in the case of a banking company provided under subsection (1) of section 20 are not exhaustive and if the claim for deduction of the interest paid on securities is allowable under the provisions of sections 30 to 37, the same can be allowed as a deduction under those sections. The assessee was a banking company and a scheduled bank Under the provisions of the Banking Regulation Act, 1949, the-bank was required to invest a portion of its funds in Government securities. The bank was thus required to buy and sell Government securities to maintain certain ratios. During the assessment years 1979-80 and 1980-81, the assessee sold Government securities ex-interest and received sums of Rs.5,70,740 and Rs.4,75,294, respectively, for the two years concerned with respect to the broken period up…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492