JUDGMENT:— This appeal arises from the judgment of the Karnataka High Court in I.T. Referred Case No. 33 of 1973 (reported in 1976 Tax LR 524). 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 securities taken over by the assessee bank from Jayalakshmi Bank Ltd., and

b) Rs. 11,630/ -, interest accrued up to the date of purchase in the case of securities purchased by the assessee bank from the open market?"

2. During the accounting year relevant to the assessment year 1968-69, the assessee which is a banking company received the above mentioned amounts as interest on securities purchased from another banking company as well as in the open market. These two amounts were brought to tax by the. Income-tax Officer u/ S. 18 of the Income-tax Act, 1961. The assessees claim that these amounts were deductible under Sections 19, 20 and 37 was rejected by the officer. The order of assessment was confirmed by the Appellate Assistant Commissioner