Later, the assessing authority invoked the provisions of Section 154 of the Income tax Act, 1961, and cancelled such allowance for the reason that income by way of interest from purchase and sale of securities should be companyputed under the head Interest on securities and the provisions of sections 18 to 20 did number permit such deduction.
The question that arises in these appeals by the Revenue against the decision of the High Court of Kerala see 2000 241 ITR 374 reads thus page 377 Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the rectification order of the Assessing Officer ?
During the assessment years in question, namely, 1979 80 and 1980 81, it deducted the interest paid for broken periods and this was originally allowed.
The third learned judge held in favour of the assessee both in regard to the invocation of Section 154 and also on the merits.
The two learned judges who companystituted the Division Bench that originally heard the matter took divergent views both in relation to the applicability of the rectification provision as also on the merits.
Having regard to the difference of opinion among the learned judges of the High Court on the principal question, it is clear that there was a debatable question and number?
The matter went up to the Tribunal and the Tribunal held that a debatable issue was involved and that the assessing authority was, therefore, number justified in invoking the machinery for rectification under Section 154.
Arising out of the order of the Tribunal, the question aforestated was referred to the High Court.
The assessee is a scheduled bank.
The matter was, therefore, placed before a third learned judge.
It is required to buy and sell Government securities.
