Interest on bank fixed deposits is taxable; loan interest paid to same bank cannot reduce deposit income under s.57(iii)

SC held that interest received on a fixed deposit is taxable income and cannot be reduced by interest paid on a loan from the same bank; there is no legal provision permitting such diminution simply because the deposit and borrowing are with the same bank. The tribunal's view that s.57(iii) did not apply was accepted, and the payments of interest on the loan did not diminish the assessee's interest income from the fixed deposit. Appeals allowed.

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The Supreme Court ruled in favor of the Revenue in an appeal regarding the assessment of interest income on fixed deposits and loans. The court held that interest received on fixed deposits cannot be reduced by interest paid on loans taken against those deposits. The judgment emphasized that there is no legal provision allowing such reduction, regardless of whether the loan was taken from the same bank as the deposit. The decision overturned the High Court's ruling and favored the Revenue.

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