1990 (9) TMI 5

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....rom the judgment of the Karnataka High Court in Income-tax Referred Case No. 33 of 1973. The question which arose for consideration was : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the following two sums were admissible as deductions under sections 19, 20 and 37 of the Income-tax Act, 1961 : (a) Rs. 58,568, interest accrued on s....

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....me-tax Appellate Tribunal held that the interest earned from the securities was deductible under sections 19, 20 and 37. The High Court, on a reference at the instance of the Revenue, held that the amounts received by the assessee as interest on securities were taxable under section 18 of the Act. The High Court referred to CIR v. Pilcher [1949] 31 TC 314 (CA) and other cases, and observed that....

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....act is, whatever was the consideration which prompted the assessee to purchase the securities, the price paid for them was in the nature of a capital outlay and no part of it can be set off as expenditure against income accruing on those securities. Subsequently, when these securities yielded income by way of interest, such income attracted section 18. A claim for deduction can be sustained onl....