Interest on Government securities held as stock-in-trade was outside the relevant income-tax exemption provisions.

Where Government securities are held as stock-in-trade, the relevant income-tax exemption provisions were treated as inapplicable to the interest earned on those securities. The Rajasthan High Court followed its earlier decision between the same parties on an identical question for prior assessment years and saw no reason to depart from that reasoning. The result was that the Tribunal's view was upheld, and the assessee's claim that the cited exemption provisions did not apply to the interest income was sustained.

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Issues: Whether the Tribunal was right in holding that section 81(v) of the Income-tax Act, 1961, for the assessment years 1966-67 and 1967-68, and section 80P(2)(f) of the Income-tax Act, 1961, for the assessment years 1968-69 to 1971-72, were not applicable to interest received by the assessee on Government securities held as part of its stock-in-trade.

Analysis: The issue was treated as covered by an earlier decision between the same parties on an identical question for earlier assessment years. The Court saw no reason to take a different view and applied the same reasoning to the present references.

Conclusion: The Tribunal was right in holding that the aforesaid provisions were not applicable to the interest received on Government securities held as stock-in-trade. The question was answered in the affirmative, in favour of the assessee.

Final Conclusion: The references were answered by upholding the assessee's claim that the relevant exemption provisions did not apply to the interest income in question.

Ratio Decidendi: Where Government securities are held as part of stock-in-trade, the relevant exemption provisions on the interest derived from them are not inapplicable merely because the income is interest income.

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