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TMI Blog1961 (11) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion, which is a very simple one: "Whether, in the particular facts of the case, the amount of ₹ 13,500 is properly disallowable from and out of the assessee's claim for interest payment in respect of its borrowals in the year of account ?" The assessee is a Hindu undivided family carrying on business on an extensive scale with a capital of nearly ₹ 20,00,000 (twent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On appeal, the Appellate Assistant Commissioner reached the conclusion that the assessee could claim this deduction as it was the interest paid on capital borrowed for the purpose of business. This is what the Commissioner says : "Out of ₹ 93,611, interest paid on capital borrowed, ₹ 13,500, was disallowed as interest on amounts withdrawn specifically to meet personal expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d invested substantial capital in the business, it had every right to withdraw sums of money even out of its borrowings. However, on the request of the Commissioner, the Tribunal referred the question set out above under section 66(1) of the Indian Income-tax Act. It is urged on behalf of the department by Sri Kondiah that the interest paid on any borrowing made for the personal use of the famil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee drew out from time to time various sums of money aggregating to ₹ 1,77,984 from the business. It is not a case where any particular sum purporting to be borrowed on behalf of the business was spent for household expenses. This is a case where the loans were taken for carrying on the business but the family used to withdraw some amounts from the business whenever occasions arose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esai J. agreed with the contention of the department that since the expenditure in question was unconnected with the income she had earned on her fixed deposit, she could not have recourse to section 12(2). It is only when a connection is established between the expenditure and the earning of the income that an assessee would be entitled to relief under section 12(2). That ruling does not render a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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