9911796707
TMI Blog1992 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... " ), the Commissioner of Income-tax has desired that the Income-tax Appellate Tribunal, Bench 'B', New Delhi, be directed to refer the following question for the opinion of this court " Whether, on the facts and in the circumstances of the case, the Tribunal was in law justified in holding that the liability of interest payable to the Allahabad Bank, amounting to Rs. 73,414, was allowable ? " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined books of account, it was not entitled to take the benefit of the mercantile system of accounting and the claim for deduction could not be allowed on accrual basis. Another ground given was that the assessee had advanced certain interest-free loans to its sister concerns and thereby used the borrowing indirectly for extra-commercial considerations. On these reasonings, it was held that the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal filed at the instance of the Revenue. The reference application under section 256(1) of the Act having been declined by the Income-tax Appellate Tribunal, this application has been filed seeking a direction as stated earlier. Now, sub-section (1) of section 24 of the Act, vide its clauses (i) to (x), provides for various deductions which are permissible in computing the income under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Once the nexus between the borrowed capital and the acquisition, construction, etc., of property is established and proved, the claim for deduction of interest on borrowing cannot be resisted. It may be noticed that section 24(1)(vi) permits deduction of the interest "payable" on borrowed capital utilise for the construction, etc., of property. The deduction has not been made depend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not commit any error of law when it allowed the deduction claimed by the assessee. As the answer to the question proposed is self-evident on a plain reading of the relevant provision itself, in our opinion, the order of the Income-tax Appellate Tribunal does not give rise to any statable question of law. Accordingly, we reject this application. There shall be no order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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