As per case facts, the respondent company, engaged in manufacturing, filed its income tax return. The Assessing Officer modified the assessment. The Tribunal directed re-adjudication, including set-off claims for interest ... on share application money. Re-assessment proceedings were initiated. The CIT (Appeals) partly allowed the appeal, affirming the disallowance of set-off of interest income. Both parties filed cross-appeals before the Tribunal, which allowed the deduction for interest income and remanded other issues. The Revenue appealed to the High Court, which dismissed the appeal on the taxability of interest income. The appellant filed this appeal before the Supreme Court. The question arose whether interest accrued on the deposit of share application money is taxable income at the hands of the respondent. Finally, the Supreme Court, referencing prior judgments, held that if share application money is deposited in a bank due to a statutory mandatory requirement, the accrued interest is not taxable and is eligible for deduction against public issue expenses. The Court reasoned that the issue of shares relates to the company's capital structure, and expenses incurred are to be capitalized. The purpose of such a deposit is not to make additional income but to comply with statutory requirements, and the interest accrued is merely incidental. Therefore, the interest earned was inextricably linked with the requirement to raise share capital and was adjustable towards the expenditure involved in the share issue. The High Court was correct in allowing the deduction.