COMMISSIONER OF INCOME-TAX, MADRAS vs V. MR. P. FIRM, MUAR

The Supreme Court held that under the Debtor and Creditor (Occupation Period) Ordinance No. XLII of 1948, creditors who accepted the government's scheme were not liable to income tax on amounts received towards principal but were liable for interest. The Court clarified that the principle of 'approbate and reprobate' does not apply against statutory provisions, and income cannot be taxed based on equitable doctrines if it is not taxable under the Income-tax Act. The appeals were dismissed, affirming the High Court's ruling on tax liability and deductions for payments made towards debts.