C.I.T.-Ii, Tiruchirapalli vs City Union Bank Ltd

The Supreme Court addressed the appeal against the Madras High Court's judgment regarding the taxability of interest earned by a bank on government securities under Section 2(7) of the Interest Tax Act, 1974. The Court upheld the Tribunal's ruling that such interest is not chargeable to tax, distinguishing between loans/advances and investments/securities. The appeal was dismissed, affirming the previous decisions of the Bombay High Court and clarifying that the Tribunal must ascertain the nature of the interest involved.