9911796707
TMI Blog1978 (3) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... 61, it claimed deduction from its " income from interest " of the amount of interest payable by it to its employees on the balance of their provident fund accounts. This claim was accepted by the Income-tax Officer. For the assessment years 1961-62 to 1965-66, the same claim was, however, repelled by the Income-tax Officer. He held that the assessee-co-operative society could not be said to have borrowed any money so as to claim deduction under section 19(ii) of the Income-tax Act,1961. On this view, the Income-tax Officer reopened the assessments for the previous years 1957-58 to 1960-61 and, after hearing the assessee, disallowed the claim for interest for those years as well. The assessee went up in appeal. The Appellate Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee' claim of deduction from its income from interest on securities of sums being interest paid or payable by it to its employees on account of provident fund amounts standing to the credit of their provident fund accounts in the books of the assessee for the assessment years 1957-58 to 1965-66 ? " It appears that in accordance with the bye-laws of the assessee-co-operative society its employees have to make some contributions towards provident fund. The co-operative society has to make investments in accordance with the resolution passed by the executive committee of the co-operative society. The assessee is obliged to keep funds invested in Government securities. From the course of conduct actually adopted by the society it appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words " borrowed money " require the existence of a borrower and a lender and that there must be a real borrowing in the legal sense of the word. It was also observed that borrowing as well as discounting a bill are distinct legal transactions although they produce the same result. " Borrowing " is a familiar word and " borrowing money " is a familiar phrase. In our opinion, the phrase " money borrowed " used in section 19(ii) has been used in its ordinary sense known to the commercial world. There is, in our opinion, no justification for expanding its meaning to include transactions which are not intrinsically of that nature. We, therefore, answer the question referred to us in the negative, in favour of the department and against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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