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 is not chargeable to tax, distinguishing between loans/advances and investments/securities. The appeals by the revenue were dismissed, with the Court indicating that the factual determination regarding the nature of the interest earned should be examined by the Tribunal.