Business deduction for mortgage interest upheld where prior finding of business expenditure had become final.

Mortgage interest was treated as deductible against business income because the earlier finding that it was expenditure incurred for the assessee's business had already attained finality and was not challenged by the Department. The prior direction to allow the interest against income from property was noted to be legally unsustainable after the omission of section 24(1)(iii) of the Income-tax Act, 1961 from 1 April 1969. The Appellate Assistant Commissioner's orders allowing the deduction against business income were therefore held consistent with the earlier Tribunal directions and the unchallenged findings, and the Revenue's challenge failed.

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Issues: Whether mortgage interest could be allowed as a deduction against the assessee's business income for the assessment years 1970-71 and 1971-72.

Analysis: The earlier appellate finding that the mortgage interest represented expenditure incurred for the purposes of the assessee's business had attained finality as it was not challenged by the Department. The prior direction to allow such interest against income from property was also noted to be legally unsustainable in view of the omission of section 24(1)(iii) of the Income-tax Act, 1961 with effect from 1 April 1969. The present orders of the Appellate Assistant Commissioner allowing the interest against business income were found to be in conformity with the earlier Tribunal directions and the unchallenged findings already recorded.

Conclusion: The deduction of the mortgage interest against business income was upheld and the Revenue's challenge failed.

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