9911796707
TMI Blog2002 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as stated in the statement of case are, that the assessee is a partnership firm, carrying on business of importing timber and dealing in it wholesale. While completing the assessment for the assessment year 1990-91, the Assessing Officer denied the claim for deduction of interest payment of Rs. 3,22,438 to a foreign banker from the business income under section 40(a)(i) of the Income-tax Act, 1961 as the required tax was not deducted at source under Chapter XVII-B of the Income-tax Act. On appeal, the Commissioner of Income-tax (Appeals) allowed the payment of interest in a sum of Rs. 1,06,296 and for rest of the amount rejected the appeal. On further appeal by the assessee, the Appellate Tribunal allowed the appeal and directed the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is absolutely no material whatsoever is made available by the assessee to come to the conclusion that the extract of Karur Vysya Bank taken note of by the Tribunal is pertaining to the transaction of import, which is the basis for the claim of payment of interest, and there is considerable confusion on the part of the assessee in claiming deduction in respect of a sum of Rs. 3,17,805 towards interest payment as stated above and thus the relief granted by the Appellate Tribunal is without any material. The reliance on the circular of the Board under Circular No. 65 dated September 2, 1971, also would not in any way give a helping hand to the Tribunal to come to the conclusion. Mr. Janakiraman, learned counsel for the assessee, argued for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st payable outside India is chargeable to tax in India. The assessee has also claimed that since the money has been lent outside India the interest also accrues outside India and therefore the amount is not taxable in India." It is rather strange to note that before the Commissioner of Income-tax (Appeals), the stand of the assessee was totally different, the relevant portion of paragraph No. 4 of the first appellate order, which is extracted as follows: "The appellant's representative objected to it on the ground that the expenditure debited under the head, 'interest' was finance charges to Grindlays Bank, Madras, at a certain percentage of supply bills, received by the appellant and hence, the finance charges formed part of the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills or hundies by the foreign exporter and there are lot of variance in the stand and also the bank through which the bills are discounted or negotiated. From the materials made available before us, we are of the considered view that there is absolutely no material, much less, sufficient material available for the Tribunal for regarding the payment of interest towards the sale price of timber. The conclusion arrived at by the Tribunal is based on presumption as extracted above. In a taxing statute, there cannot be presumption as to the facts. The person, who claims the benefit under the provisions of the Act, has to prove before the authorities that he is entitled to the benefit of deduction by placing proper and sufficient material to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no material for the Appellate Tribunal to record such an observation as the assessee has failed to prove that the bill amount was credited to the supplier's account without waiting for realisation of bill on due date. Further we find that there is absolutely no evidence to show the nature of the transaction the assessee had with the foreign exporter. There are also no materials to indicate that the amount of interest paid to the Karur Vysya Bank had any connection or link with the interest debited to the profit and loss account of the assessee of a sum of Rs. 3,17,805 which the assessee owed to the collecting foreign banker. Hence, we are of the considered view that the Tribunal has committed a serious error in presuming that the Karur Vys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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