Commissioner of Income Tax vs Bank of Rajasthan Ltd.

Controversy involved in these appeals is now covered by a recent judgment of Hon''ble the Supreme Court dated 19-7-2007 rendered in the case of CIT v. Corporation Bank (2007) 295 ITR 193 whereby the judgments rendered by Bombay High Court in the case reported in Discount and Finance House of India Ltd. Vs. S.K. Bhardwaj, Commissioner of Income Tax and Others, and Commissioner of Income Tax Vs. United Western Bank Ltd., have been affirmed, and it has been held that interest earned by the assessee-banks on dated Government securities is not liable to tax by pointing out that there is a basic difference between loans and advances on the one hand and investments/securities on the other, and therefore, it was held that interest earned by the bank on dated Government securities is not liable to tax under the provisions of the Interest-Tax Act, 1974.

In that view of the matter following the judgment of Hon''ble the Supreme Court in Corporation Bank''s case (supra), the appeals are dismissed.