High Court of Delhi · Judgments and reasoned final orders
Commissioner of Income Tax v. M/s PNB Capital Services Ltd.
ITA 154/2006 ·
Interest-tax Act, 1974 (as amended by Finance (No. 2) Act, 1991): interest earned on Government Securities and Public Sector Undertaking (PSU) Bonds is not exigible to interest-tax under section 2(7), following CIT v. Sahara India Savings and Investments Corp. Ltd., 321 ITR 371 (SC).
1. FACTS OF THE CASE
The Revenue filed ITA 154/2006 against M/s PNB Capital Services Ltd., which was admitted by the Delhi High Court on 06.02.2006 on the substantial question of law whether the ITAT was correct in law in holding that interest earned on Government Securities and Public Sector Undertaking (PSU) Bonds is not exigible to tax under the Interest-tax Act, 1974 as amended by the Amending Act, 1991.
2. DISCUSSION BY THE COURT
When the appeal came up for hearing on 08.05.2026, Senior Standing Counsel for the Revenue fairly submitted at the outset that the question of law stood conclusively decided against the Revenue by the Supreme Court in Commissioner of Income Tax v. Sahara India Savings and Investments Corporation Limited, (2010) 321 ITR 371 (SC), which held that interest on Government Securities and PSU Bonds is not 'interest on loans and advances' exigible to tax under the Interest-tax Act, 1974 as amended.
3. JUDICIAL DECISION
Recording that the issue had attained finality under the judgment of the Supreme Court in Sahara India Savings and Investments Corporation Limited, 321 ITR 371 (SC), the High Court dismissed ITA 154/2006.
4. OUTCOME
In favour of the assessee (M/s PNB Capital Services Ltd.). The Revenue's appeal was dismissed.
5. AKHB REVIEW POINT
AKHB analysis: for legacy direct-tax appeals under the Interest-tax Act, 1974 pending before High Courts, verify whether the disputed receipts represent interest/discount on debentures, bonds or Government securities (investment instruments) rather than loans and advances; all such investment-security interest stands excluded under Sahara India Savings (321 ITR 371).
Source and verification
Two-page official Delhi High Court order PDF in ITA 154/2006; paragraphs 1-3 span PDF pages 1-2.
Original PDF: 2 pages · SHA-256: 67d08e024c880312fa4496d24549d65eb1667cb7a66d4bf99903b92ea5f3a0b6
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies the Interest-tax Act, 1974 (as amended by Finance (No. 2) Act, 1991) read with section 260A of the Income-tax Act, 1961. Income-tax Act, 2025 equivalence is not applicable.
Full judgment checked. Follows CIT v. Sahara India Savings and Investments Corporation Limited, (2010) 321 ITR 371 (SC). Comprehensive subsequent judicial treatment has not been verified.
AI disclosure and professional disclaimer
AI-assisted source review. Independent human approval is not represented.
General research only. Read the complete judgment and verify applicable law and subsequent treatment before reliance.