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TMI Blog1993 (2) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rs. 5 lakhs. Under the terms of the mortgage, compound interest at the rate of 6 3/4 per cent. was payable on the mortgage loan. A charge was also created on the property for the payment of compound interest. This loan of Rs. 5 lakhs was raised for meeting the excess profits tax liability. Similarly, on May 16, 1962, the assessee created an equitable mortgage on his Ghatkopar property for securing a loan of Rs. 1,50,000 charge was also created on this property for the payment of interest. This loan was also raised for discharging the above excess profits tax liability. For the assessment year 1969-70, the assessee became liable to pay interest of Rs. 34,534 on the mortgage loan of Rs. 5 lakhs and Rs. 26,660 on the mortgage loan of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is referred to us under section 256(1) of the Income-tax Act, 1961, at the instance Of the Revenue : "Whether, on the facts and in the circumstances of the case, interest liability of Rs. 61,194 was a permissible deduction under section 24(1)(iv) of the Act?" A similar question came up for consideration before a Division Bench of this court (to which one of us, Mrs. Manohar J., was a party) in the case of CIT v. Central Bank Executor and Trustee Co. Ltd. [1993] 203 ITR 666 (Income-tax Reference No. 138 of 1977). This was decided by a Division Bench of Mrs. Sujata Manohar and B. N. Srikrishna JJ, on October 23, 1992. The Division Bench has construed the provisions of the amended section 24(1)(iv) and has come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge was liable to be deducted. The assessee has been allowed the benefit of such deduction in the previous assessment years. Hence, after the amendment of section 24 on April 1, 1969, also the assessee must be given the benefit of such deduction and, for the purpose of amended section 24(1)(iv), the charge which is created prior to the amendment should be considered as an involuntary charge. This submission, however, does not appeal to us. The question whether the charge was voluntary or involuntary will have to be decided with reference to the facts relating to the creation of such charge. If the charge is created voluntarily, it remains so, whether it is created before the amendment or after the amendment. If the benefit of the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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