National Bank Of India V. Commissioner Of Income Tax

1939 Present: Poyser S. P. J. and Hearne J.

NATIONAL BANK OF INDIA v. COMMISSIONER

OF INCOME TAX

D. C. Inty. (Special ) 59

Income tax-Interest on overdrafts given by bank to debtor in London-Change of residence by debtor to Ceylon-Income arising in Ceylon or not-Viability of bank-Income Tax Ordinance, 1932. ss. 5 (1) (b) and 44 (1) (3).

A, who resided in England in the year 1928, obtained overdrafts from the National Bank of India, Ltd., which were secured by the deposit of shares owned by him in companies registered in Ceylon and by sterling securities, the property of A's brother. It was one of the terms of the contract implied, if not expressed, that both the principal and the interest should be payable to the bank in England. In April, 1936, A became a resident in Ceylon within the meaning of section 33 of the Income Tax Ordinance.

Held, that the interest payable on the overdrafts cannot be said to be income ?arising in or derived from Ceylon? within the meaning of section 5 (1) (b) of the Income Tax Ordinance and that the National Bank of India cannot be assessed for income tax in respect of th

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