1988 (2) TMI 57

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..... t is made at the instance of the Commissioner of Income-tax under section 256(1) of the Income-tax Act, 1961 (" the Act ", for short). The assessee is a company incorporated under the Companies Act. Its bank account, we are told, is continually an overdraft account. Substantial interest was paid to the bank on the amounts of overdraft ascertained at periodical intervals. It is common ground that .....

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..... 51. The assessee claimed that while the proposal to disallow the interest of Rs. 1,29,151 undersection 40A(8) of the Act is unexceptionable, still the same amount has to be allowed by way of interest on the amounts borrowed for payment of tax under section 80V of the Act. It was pointed out that the assessee, paid a sum of Rs. 103 lakhs by way of taxes during the assessment year. All these monies .....

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..... nd that is how the present reference arises. The facts are broadly clear. There is no dispute about the assessee having drawn Rs. 103 lakhs from the bank overdraft account for payment of taxes. Had the assessee separately borrowed this amount and paid interest thereon, the interest payable would have been deducted under section 80V of the Act. As a matter of commercial expediency and convenience .....

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