2004 (6) TMI 298

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....spect of loans taken by him. The AO made the disallowance of payment of interest amounting to Rs. 3,58,735. The learned CIT(A) has discussed this issue at p. 2 of his order and observed at p. 3 in para 3.2 that the assessee had obtained O.D. facilities from various banks against the pledging of his FDRs. The amount taken from the banks had been utilized for giving loan. After analyzing these loans, it was found that in certain cases loans had been advanced at a rate of lower than the interest amount being paid to the bank. Thus, to the extent the assessee had paid in excess over the amount of interest due to him, the same was certainly not allowable as a deduction. Similarly, interest on account of advance to family members for personal pur....

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.... is directed to allow relief of Rs. 1,483. 7. After having considered the facts of the facts, we find that the disallowance of interest had rightly been computed by the learned CIT(A). The learned Authorised Representative had also submitted that interest of Rs. 53,330 paid on loan taken for payment of advance income-tax was also an allowable deduction as held in the case of Woolcombers of India Ltd. vs. CIT (1981) 23 CTR (Cal) 204 : (1982) 134 ITR 219 (Cal). On the other hand, attention was also invited to the case of East India Pharmaceutical Works Ltd. vs. CIT (1997) 139 CTR (SC) 372 : (1997) 224 ITR 627 (SC). In the first case, the deduction on interest on loan taken for payment of advance tax liability was held to be allowable on th....