2001 (10) TMI 80

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..... eferred for the opinion of this court: "Whether, on the facts and in the circumstances of the case, interest on the borrowal made by the assessee against the fixed deposit made by the assessee with the bank is an allowable deduction under section 57(iii) of the Income-tax Act, 1961?" The relevant assessment year is 1981-82. The assessee had a fixed deposit of Rs.22.85 lakhs with a bank. Subse .....

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..... ) held that it would not be appropriate to ignore the assessee's claim for deduction of Rs.84,654 since the interest was taken away by the bank as consideration for the facilities extended by it to the assessee. On further appeal by the Revenue, the Income-tax Appellate Tribunal held that the interest at the rate of 2 per cent. in excess of the interest payable on the fixed deposit by the bank was .....

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..... n accordance with the provisions of the Income-tax Act and the interest paid on borrowals was not an allowable deduction under section 57 of the Income-tax Act. Thus the question was answered against the assessee and in favour of the Revenue. We also find that the earlier view adopted by this court in CIT v. Dr. V. P. Gopinathan [1998] 229 ITR 801 was reversed by the Supreme Court in CIT v. Dr. .....

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