The division bench of the Bombay High Court, in CIT v. American Express Bank, held that the amount of interest paid to the seller of the securities for the broken period is deductible from the total income of the assessee under the provisions of the Income Tax Act.
In the instant case, the Income Tax Appellate Tribunal preferred a reference to the High Court by raising a question that whether the interest paid to the seller of securities for the broken period should be allowed as deduction.
The applicant-Revenue contended that the Apex Court, in Commissioner of Income Tax Vs. Citi Bank N.A., decided the similar issue in favour of the assessee and against the Revenue.
Since the question involved in both the cases were identical, the bench comprising of Justice M.S Sanklecha and Justice A.K Menon, based on the above Apex Court decision, observed that the amount is deductible from the taxable income of the assessee.
Read the full text of the order below.
