Judgment :

In this batch of Civil Appeals, the main issue which arises for determination is: Whether "interest" which the assessee earned on bonds and debentures was chargeable to tax in view of the definition of the term "interest" in Section 2(7) of the Interest Tax Act, 1974.

Respondent Company is a company registered under the Indian Companies Act, 1956. One of the objects for which the company was incorporated is to buy, sell, invest or otherwise deal in securities, bonds or fixed deposits issued by any institution, body corporate, corporation, establishment constituted under any Central or State laws or any other securities in which the company may be required to invest under any law in force.

For deciding the afore-stated issue, one needs to examine the provisions of the Interest Tax Act, 1974 as under:

"2. In this Act, unless the context otherwise requires,-

"(5) "chargeable interest" means the total amount of interest referred to in section 5, computed in the manner laid down in section 6;"

"(5A) "credit institution" means,-

(i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section