THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. No. 39 OF 1999 DATED:25-11-2011 Between: State Bank of Hyderabad. … Appellant And The Deputy Commissioner of Income Tax. … Respondent THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. No.39 OF 1999 JUDGMENT: (per the Hon’ble the Chief Justice Shri Madan B. Lokur) Although this appeal was admitted long ago, it appears that the substantial question of law was not framed at the time of admission. 2. Accordingly, we frame the following substantial question of law:- “ Whether in the facts and in the circumstances of the case and having regard to the provisions of Section 2(7) of the Interest Tax Act, 1974, the Income Tax Appellate Tribunal was correct in law in holding that interest on Government Securities earned by the appellant bank should be treated as interest on loans and advances taxable under the Interest Tax Act, 1974 ? 3. Learned counsel for the appellant-assessee has drawn our attention to the decision of the Supreme Court in Commissioner of Income Tax vs. Corporation Bank[1], wherein the Supreme Court considered a batch of Civil Appeals and the question was whether interest earned by an assessee banks on dated Government securities was liable to be assessed under Section 2(7) read with Section 4 of the Interest Tax Act, 1974 (hereinafter referred to as “the Act”). 4. The Supreme Court was of the view that there is a basic difference between loans and advances on the one hand and investments and securities on the other. The Supreme Court made a reference to the provisions of the Income Tax Act, the Companies Act as well as the Banking Regulation Act. The Supreme Court approved the decision of the Bombay High Court in Discount and Finance House of India Ltd., vs. S.K. Bharadwaj, C.I.T.[2] as well as C.I.T. vs. United Western Bank Ltd[3], which discussed the difference between loans and advances on the one hand and investment and securities on the other. The Supreme Court agreed with the view taken by the Bombay High Court in the aforesaid decisions. 5. In view of the fact that the matter is covered by the decision of the Supreme Court in Corporation Bank(supra-1), the substantial question of law is answered in the negative and in favour of the assessee and against the Revenue. 6. The appeal stands disposed of. MADAN B. LOKUR, CJ SANJAY KUMAR, J 25-11-2011 pnb [1] 2007(295)ITR 0193 [2] (2003) 259 ITR 295 [3] (2003)259 ITR 312