Commnr. Of Income Tax, Kolhapur vs Ratnakar Bank Ltd

The Supreme Court upheld the Bombay High Court's decision that interest earned by banks on government securities is not chargeable to tax under Section 2(7) of the Interest Tax Act, 1974. The Court distinguished between loans and advances versus investments/securities, affirming the Tribunal's ruling that interest on securities does not fall under taxable interest. The appeals by the revenue were dismissed, with no costs awarded.