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Income Tax Laws – I

Notes Accrued Interest on National Saving Certificates 5000
Interest on Income Tax Refund 4000
Gift received from a friend (exempted if amount is 50000/= or less) 60000
Winning from Television shows 100000

Taxable Income from other sources 224000

Self Assessment

Interest on securities held by the following institutions, organisations, association or funds are
dealt in by which Section of IT Act.
20. Approved scientific research association

21. Approved games associations or institutions
22. Any Regimental Fund or Non-public Fund
23. Authority established for the development of Khadi and Village Industries
24. European Economic Community

Case Study M. N. Ramaswamy Iyer vs Commissioner of Income-Tax

he assessee is a Hindu undivided family carrying on business of banking and
conducting chits. The assessee’s accounting year ends on 31st December; and I.T.R.
TNo. 19 of 1967 relates to the assessment year 1958–59, while the other case relates
the year 1959–60. For the assessment year 1958–59, the assessee returned a net loss of
` 19,302 under business. In arriving at this figure, it made a deduction of ` 38,193 by way
of interest paid to various parties on loans. This amount included a sum of ` 18,525 made
up as follows:
1. Palghat Financing Co. (P.) Ltd. 12,148
2. Palghat Investment Corporation Ltd. 1,890
3. Narasimha Bank, Alathur 4,487

For the assessment year 1959–60, the assessee returned a net loss of ` 1,890 under business.
The deductions made by the assessee in arriving at the above amount consisted of sum
` 17,514. The represented interest paid on loans to the following parties:
1. Palghat Financing Co. (P) Ltd. 10,080
2. Palghat Investment Corporation Ltd. 1,995
3. Narasimha Bank 3,090

4. M. N. Ramaswamy Iyer & Co. Ltd. 2,349
The amount paid as interest by the assessee to the aforesaid concerns in the two years of
assessment did not relate to amounts which it borrowed for its banking or chit business,
but it represented amounts invested for acquiring shares in the said concerns. The assessee
however, claimed to deduct the said amounts under clauses (iii) and (xv) of section 10(2) of
Contd...

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