9911796707
TMI Blog1992 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... h, Jaipur, has referred the following question of law : For the assessment year 1978-79 : " Whether the learned Tribunal was right in law in holding that interest on borrowed capital for the taxes paid during the previous year relevant to the assessment year 1978-79 alone has to be allowed as deduction under section 80V of the Income-tax Act, 1961, and not for interest on borrowed capital for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer was of the view that the debit balance of Rs. 1,38,591 at the beginning of the year for Diwali ending 1977 consisted of withdrawal for two purposes : (i) withdrawal pertaining to the payment of income-tax of Rs. 16,764 + Rs. 129, and (ii) balance for items other than payment of income-tax. The credit entries were higher by Rs. 14,287 during the year and thus, in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1978-79 has already been allowed. The Tribunal was of the view that the interest on borrowed capital for payment of tax during the relevant previous year has to be allowed as deduction while computing the income of the assessee and Dot for the earlier years. For the assessment year 1979-80, it was held that most of the withdrawals during the year were for the personal use of the assessee. Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the deduction of interest paid during the previous year on any money borrowed for payment of any tax is allowable. The money is borrowed once, but liability for payment of interest remains till the borrowed money is returned. The only condition in the section is that there must be actual payment of interest and that the money should be borrowed for the payment of tax. If the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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