Alfred Henry Lionel Leach, C.J.

1. The first question referred involves the construction of Section 8 of the Indian Income Tax Act, 1922, as amended in 1939. The first clause of the section states that the tax shall be payable by an assessee under the head "Interest on securities" in respect of the interest receivable by him on any security of the Central Government or of a Provincial Government, or on debentures or other securities for money issued by or on behalf of a local authority of a company. Then follow three provisos. The first proviso allows the assessee to deduct the interest payable by him on money borrowed for the purpose of investment in securities. In other words, the tax is only payable on the amount of interest received, less the interest which the assessee has to pay as the result of having borrowed to make the investment. The second proviso says that no income-4 tax shall be payable on the interest receivable on a security of the Central Government issued or declared to be Income Tax free. The third proviso makes a similar provision in respect of a security of a Provincial Government issued Income Tax free, but in that case the tax is payable by the Provin