Cit vs Corporation Bank

The Supreme Court held that interest earned by banks on dated Government securities is not liable to be assessed under Section 2(7) and Section 4 of the Interest Tax Act, 1974, distinguishing between loans/advances and investments/securities. The Court affirmed the decisions of the Bombay High Court in Discount and Finance House of India Ltd. v. S.K. Bhardwaj and CIT v. United Western Bank Ltd., which had been accepted by the revenue. Consequently, the civil appeals filed by the department were dismissed with no order as to costs.