Interest on securities was to be taxed when it become due and not when it only accrued at end of assessment year

Court : HIGH COURT OF MADRAS

 Brief :
Section 28(i), read section 145, of the Income-tax Act, 1961 - Business income - Year in which chargeable
(Interest on securities) - Whether as interest on securities was taxable only on specified dates when it
becomes due for payment, interest on securities had to be assessed only on basis of interest due on half
yearly due dates and interest accrued as at end of assessment year was not to be taken - Held, yes - [Para
3] [In favour of assessee]
Section 36(1)(viia) of the Income-tax Act, 1961 - Bad debts - In case of banks (Non-rural branches) -
Assessment year 1994-95 - Whether claim of bad debts in relation to non-rural branches of assessee bank
would be allowable without first setting off against 'provisions' already allowed under section 36(1)(viia),
when no distinction between advances relating to non-rural and rural advances had been made in section
36(1)(vii) - Held, yes [Para 4] [In favour of assessee]

 Citation :
Commissioner of Income-tax-II, Tiruchirapalli
v.
City Union Bank Ltd.

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