2001 (2) TMI 10

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....est of the Revenue the following two questions : "1. Whether, on the facts and in the circumstances of the case, the assessee is to be assessed on the gross amount of interest received by him on his fixed deposit or on the interest received as reduced by the amount of interest paid on the loan taken on the security of such deposit ? 2. Whether, on the facts and in the circumstances of the ca....

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....Rs. 90,410. The assessee claimed that he could be taxed only on the differential amount of Rs. 27,034. His contention was rejected by the ITO and in first appeal. The Tribunal took the contrary view, and out of its judgment the questions quoted above were referred to the High Court. The High Court answered the questions as indicated above on the basis that the situation was one of the mutuality. ....

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.... the eye of the law. The interest that the assessee received from the bank was income in his hands. It could stand diminished only if there was a provision in law which permits such diminution. There is none, and, therefore, the amount paid by the assessee as interest on the loan that he took from the bank did not reduce his income by way of interest on the fixed deposit by him in the bank. 5. ....