In Brief
Commissioner of Income Tax sought to tax interest earned by Shree Rama Multi Tech Ltd on share application money deposited in banks during a public share issue as income from other sources. The High Court upheld the Tribunal's decision that such interest should not be taxed but instead set off against the capital expenditure of the public issue. The Supreme Court affirmed, holding that statutory deposits of share application money generate interest that is incidental to the share issuance process, not independent income. Therefore, the interest is not taxable and is properly adjustable against public issue expenses.
The lawyer headnote and full judgment text are available to registered users.