Indian Overseas Bank v. The Commissioner General of Inland Revenue – CA TAX/0005/2019-2019

In the case between Indian Overseas Bank (Appellant) and the Commissioner General of Inland Revenue (Respondent), the court addressed the deductibility of interest expenses incurred in relation to Sri Lanka Development Bonds, where the corresponding interest income qualified for a tax exemption under section 13(xxx) of the Inland Revenue Act, No. 10 of 2006. It was held that the Appellant could not deduct such interest expenses, as the statutory requirement to maintain separate accounts for exempt income and related expenses under section 106(11) of the Act had not been satisfied. The judgment reaffirmed the principle that a taxpayer seeking deduction for expenses tied to exempt income must comply strictly with statutory prerequisites, especially provisions designed to prevent dual benefit