1. Interest income assessability — Income-tax assessment years — Determination of taxability. (Para 1 )
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1997 Supreme(SC) 1857
SUPREME COURT OF INDIA
S.C. Sen and V.N. Khare, JJ.
Mekala Raja Reddy (Died) Thr. M.S. Reddy - Appellant
Versus
The Commissioner of Income Tax - Respondent
C.A. Nos. 2908-09 of 1987
Decided On : 19-11-1997
The assessability of interest sums for income-tax is influenced by relevant legal precedents, such as the Rama Bai case.
Headnote:
Income-tax - Interest - Assessability - Rama Bai and Ors. v. Commissioner of Income Tax, A.P., Hyderabad and Ors. 1990 Supp SCC 699
Fact of the Case:
The High Court examined whether the interest sums received by the assessee were assessable to income-tax for the respective assessment years.
Finding of the Court:
The High Court answered in the affirmative, but the Supreme Court, referencing Rama Bai and Ors. v. Commissioner of Income Tax, A.P., Hyderabad and Ors. 1990 Supp SCC 699, set aside the High Court's order and ruled in favor of the assessee.
Issues: Assessability of interest sums received by the assessee for income-tax.
Ratio Decidendi: The decision in Rama Bai case influenced the court's ruling, leading to the setting aside of the High Court's order and a decision in favor of the assessee.
Final Decision: The appeal was allowed, and no costs were imposed.
Legal Category Hierarchy
Table of Contents
2. Whether interest received by the assessee is assessable to income-tax. (Para 1 )
3. The court applied the legal position established in the precedent of Rama Bai and Ors. v. Commissioner of Income Tax. (Para 2 )
4. The taxability of the interest is determined by the precedent set in Rama Bai and Ors. v. Commissioner of Income Tax. (Para 2 )
5. Appeal allowed — High Court order set aside — Question answered in the negative. (Para 2 )
6. Whether the interest received by the assessee is assessable to income-tax?
The court held that the interest received by the assessee was not assessable to income-tax, following the precedent established in Rama Bai and Ors. v. Commissioner of Income Tax, A.P., Hyderabad and Ors. (Para 2 )
JUDGMENT
1. The following question of law was referred by the Tribunal to the High Court:
"Whether on the facts and in the circumstances of the case, the two sums of interest of Rs. 52, 397/- and Rs. 17,138/- received by the assessee were assessable to income-tax for the assessment years 1972-73 and 1973-74 respectively."
2. The High Court answered the question in the affirmative and against the assessee. The point in controversy was examined by this Court in the case of Rama Bai and Ors. v. Commissioner of Income Tax, A.P., Hyderabad and Ors. 1990 Supp SCC 699. In view of that decision, we set aside the order passed by the High Court and answer the question in the negative and in favour of the assessee.
3: The appeal is allowed. There will be no. order as to costs.
