Income from securities: interest cannot be recharacterised as business or other-source income, so earned income relief denied.

The High Court held that interest on securities is chargeable as income from securities and cannot be recharacterised as business income or income from other sources; consequently earned income relief does not apply to such interest. The court applied the statutory scheme treating tax as a single charge on aggregate income divided into exclusive heads and reaffirmed the principle that income specifically falling under one head excludes allocation to another, while recognising that profits from trading in securities may constitute business income distinct from interest on securities.

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Issues: Whether interest on securities received by the assessees for the accounting year should be treated as earned income falling under 'income from business' (Section 10) or as 'income from other sources' (Section 12), and not as income from 'securities' (Section 8) of the Income-tax Act, 1922.

Analysis: The Court examined the statutory scheme of taxation as a single tax on aggregate total income classified under distinct heads (Sections 3, 4, 6 and Sections 8-12). It considered authorities establishing that income chargeable under a specific head cannot be reallocated to another head for tax computation (including analogous decisions on exclusive schedules). The definition of earned income (Section 2(6AA)) was noted not to include interest on securities under Section 8. The Court held that where a specific head (Section 8) applies to interest on securities, neither the assessee nor the department may treat that same interest as business income under Section 10 or as income from other sources under Section 12; profits from trading in securities may be business income, but interest specifically chargeable under Section 8 remains income from securities.

Conclusion: The interest on securities must be treated as income from securities within the meaning of Section 8 of the Income-tax Act, 1922; the assessees are not entitled to earned income relief in respect of such interest. The question is answered against the assessees.

Ratio Decidendi: Income specifically chargeable under Section 8 of the Income-tax Act, 1922 (interest on securities) cannot be recharacterised and taxed under Section 10 or Section 12; specific heads exclude reallocation to other heads for tax purposes.

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