9911796707
TMI Blog1988 (3) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... to house property as well as for the purposes of business and interest on interest had to be paid on account of the delay in the payment of interest. The ITO examined this controversy in detail for the asst. yr. 1980-81. The case of the assessee before the ITO was that the entire amount of interest for the assessment years in question was claimable either under s. 24(1)(vi) or under s. 36(1)(iii) or under the general provisions of s. 37 as a business expenditure. The ITO noticed that ss. 24(1)(vi) and 36(1)(iii) both used substantially the same expression "the amount of the interest paid in respect of capital borrowed" and that because in terms of the binding decision of the Supreme Court in the case of Shew Kissen Bhatter vs. CIT 1973 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, the learned CIT(A) noticed that for the preceding asst. yr. 1978-79 a similar point had arisen and the Tribunal had dealt with it vide its order dt.22nd Sept., 1986in ITA No. 5695/Del/84. For that year calculations of interest were filed by the assessee for the first time before the Tribunal. Therefore, keeping in view the decision of the Supreme Court in the case of Shew Kissen bhatter, the Tribunal directed the ITO to look into those details in order to find out as to what part of interest claimed actually represented interest on interest which would be inadmissible under s. 24(1)(vi). The learned CIT(A) also noticed that loans were raised in the assessment years in question from the directors as well as share holders and that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to the amounts borrowed for the construction etc., of the house property. 4. Before us, on behalf of the Department Shri P.R. Toora, the learned Departmental Representative strongly relied upon the orders of the ITO and submitted that the deletion of the disallowance made by the learned CIT(A) for the various years could not be justified on the basis of the Supreme Court's decision referred to above. He also submitted that the provisions of s. 37 could not be attracted in these cases. On the other hand Shri P.N. Monga, strongly relied upon the order of the learned CIT(A) with the help of the calculations of interest, copies of which were placed on the record. 5. We have considered the rival submissions of both the sides as also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold the finding of the learned CIT(A) on this point. 6. The next ground relates to the additions made under s. 40A(8) representing interest on alleged deposits made by directors. This common ground is relevant for the asst. yrs. 1980-81 to 1983-84. The ITO made the disallowances as follows:-- Assessment year Disallowances made 1980-81 15per cent of Rs. 1,32,003 (Rs. 19,800). 1981-82 15per cent of Rs. 1,31,664 (Rs. 19,750). 1982-83 15per cent of Rs. 1,21,617 (Rs. 18,242). 1983-84 15per cent of Rs. 1,12,720 (Rs. 16,908). 7. The disallowances were made by the ITO on the basis that the mischief of s. 40A(8) was attracted to the whole of the interest income claimed by it since the assessee was claiming that it had been following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Special Bench referred to above, the order of the learned CIT(A) was entitled to be upheld. He also pointed out that the Department was already in reference against the aforesaid earlier decisions of the Tribunal. 10. We have considered the rival submissions of both the sides. In the present case there is no finding of the IT authorities that interest amounts were paid to the directors or their relatives on credit balances in their current accounts with the assessee or as deposits. Therefore, it cannot be said that on facts, the decision of the Special Bench referred to above could be attracted. In view of the decisions of the Tribunal for the earlier asst. yrs. 1976-77 and 1977-78, we are of the view that the learned CIT(A) was justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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