JUDGMENT - KAPADIA S.H., J.:---The short question of law which arises for determination is : Whether interest on debentures, bonds and securities is taxable under section 5 of Interest Tax Act, 1974.

FACTS :

2. The petitioner is a company incorporated under the Companies Act, 1956. It was promoted by RBI, ICICI, UTI, SBI, IDBI etc. It is an investment company as defined under section 2(5-B)(ii) of the Interest Tax Act, 1974, as it then stood. The petitioner is a dealer in money market instruments such as call/notice/term money, treasury bills, commercial paper, certificate of deposit and Government Dated Securities. The Government Dated Securities Market has two segments viz. Primary market and secondary market. The primary market consists of issuers and subscribers. The issuers are Central and State Government. The secondary market includes Banks, Financial Institutions, Insurance Companies, Provident Funds, Trusts, individuals, Primary dealers etc. The petitioner is a primary dealer in dated Government Securities. The petitioner subscribes to, buys stocks and trades in dated Government Securities regularly. At the end of the year the petitioner shows the Dated Government securities

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