Commnr. Of Income Tax, Kolhapur vs Icici Bank Ltd

The Supreme Court addressed the issue of whether interest earned by banks on government securities is taxable under Section 2(7) of the Interest Tax Act, 1974. The Court upheld the Bombay High Court's decision, which affirmed the Income Tax Appellate Tribunal's ruling that such interest does not fall under the definition of 'interest chargeable to tax' as it pertains to loans and advances. The Court dismissed the revenue's appeals, stating that the distinction between loans/advances and investments/securities is fundamental, as established in prior judgments including Commissioner of Income Tax v. Corporation Bank.