N.V. Balasubramanian, J.
1. Pursuant to the direction of this court in T.C.P. Nos. 504 and 505 of 1983, the Appellate Tribunal has stated the case and referred to us the following common question of law for the assessment years 1976-77 and 1977-78 :
'Whether, on the facts and in the circumstances of the case, and having regard to the provisions of section 18(1)(ii) of the Income-tax Act, 1961, the Appellate Tribunal was right in holding that the interest on debentures issued by the co-operative land mortgage bank should be assessed as 'interest on securities' and not under 'other sources' ?'
2. The assessee is carrying on banking business and it had some debentures issued by the co-operative land mortgage bank. The Income-tax Officer assessed the interest income from the debentures held by the assessee issued by the co-operative land mortgage bank under the head 'other sources' for the assessment years 1976-77 and 1977-78. The Commissioner of Income-tax (Appeals) held that it should be assessed under the head of 'Interest on securities' under section 18 of the Income-tax Act, 1961. The Appellate Tribunal on appeal upheld the order of the Commissioner of Income-tax holding that in the assessee's own case for the assessment year 1975-76 rendered under the Interest-tax Act, 1974 - ITA No. 5 of 1979 - the Appellate Tribunal has accepted the claim of the assessee and held that the interest on co-operative land mortgage bank debentures should be assessed under the head 'interest on securities'. It is this order that is the subject-matter of the present tax case. At the time of hearing of the tax case reference, Mr. C. V. Rajan, junior standing counsel for income-tax appearing for the Revenue, submitted that the order of the Appellate Tribunal rendered in the assessee's own case in ITA No. 5 of 1979 came up for consideration before this court in T.C. No. 295 of 1984 (CIT v. Lakshmi Vilas Bank Ltd. : [1997]228ITR697(Mad) ) and this court by judgment dated August 29, 1996, has held that the interest on debentures issued by the co-operative land mortgage bank cannot be assessed under the head 'Interest on securities'. The above view was taken on the ground that the co-operative land mortgage bank was formed under the Co-operative Societies Act, that is an enactment made by the Tamil Nadu Government and it is not a bank established either by a Central, State or Provincial Act. Since this court has already taken the view that the interest on debentures would not come within the purview of 'interest on securities', the necessary logical consequence is that the interest on the said debentures would be assessable only under the head 'Income from other sources'.
3. In view of the above, the Appellate Tribunal's conclusion that the said interest should be assessed under 'interest on securities' is not legally sustainable. Mr. Janarthana Raja does not dispute the position of law and also concedes that the said decision would govern the facts of the cases. Accordingly, we answer the common question of law referred to us for both the assessment years in the negative and in favour of the Revenue. No costs.