Bills discounted cannot be equated with loan & advances, interest received on default not taxable under Interest Tax Act, 1974: SC

Brief of the Case

Supreme Court held In the case of State Bank of Patiala vs. CIT that it is well settled that a subject can be brought to tax only by a clear statutory provision in that behalf. Interest is chargeable to tax under the Interest Tax Act, 1974 only if it arises directly from a loan or advance in India. Also the Interest Tax Act, unlike the Income Tax Act, has focused only on a very narrow taxable event which does not include interest payable on default in payment of amount

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