1965 (11) TMI 40

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....laimed that rebate should be allowed on the entire sum of Rs. 44,720 received as interest from the said securities. But the Income-tax Officer, while completing the assessment, arrived at the figure of Rs. 33,444 as the sum representing two items, viz., (i) reasonable sum expended by the assessee in realizing the said interest; and (ii) the interest payable on the money borrowed for the purpose of investment. After deducting the said sum from the interest receivable from the said securities, he granted only a sum of Rs. 7,276 as rebate for income-tax. On appeal, the Appellate Assistant Commissioner upheld the view of the Income-tax Officer. On a further appeal, the Income-tax Appellate Tribunal, Madras Bench, held that the bank was entitled....

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....third proviso was only in regard to that part of the interest which was taxable but for the exemption. His further contention was that the notification issued by the Central Government under section 60A of the Income-tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of section 8 of the Income-tax Act. Mr. A. V. Viswanatha Sastri, learned counsel for the respondent, argued that the substantive part of section 8, read with the first proviso and the Explanation thereto, had no application to securities issued income-tax free and that the interest from the State Government securities was governed by the third proviso which did not provide for any deduction from the interest recei....

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....any such redundancy to the Central Government----we do not see any reason why the notification should not be construed on its own terms in its application to the question of rebate raised in this case. The said notification reads: " No income-tax shall be payable by an assessee on the interest receivable on the following income-tax free loans issued by the former Government of Travancore or by the former Government of Cochin, provided that such interest is received within the territories of the State of Travancore-Cochin and is not brought into any other part of the taxable territories to which the said Act applies. Such interest shall, however, be included in the total income of the assessee for the purposes of section 16 of the Indian I....