1978 (12) TMI 91

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....as Rs. 9,324 for the asst. year 1972-73 and Rs. 25,500 for the asst. yr. 1973-74. At the time of the original assessment the ITO allowed the interest payment as deduction in the computation of income of the appellant. The deductions allowed were withdrawn by the ITO by passing rectification orders under s. 154. In the rectification orders it is stated that "the interest payments not relating to business has been allowed by mistake". 3. On appeal, the AAC held: (a) The amount borrowed on which interest was payable by the appellant was not lent to M/s Khadder Kodi Beedi co., in the appellant's ordinary course of money-lending business. (b) As the appellant has no interest in the business of M/s Khadder Kodi Beedi Co., the capital was....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...., and the interest paid to M/s V.D. Mehta Co., should be allowed as a deduction against the interest received from M/s Khadder Kodi Beedi Co. In reply to this letter, the ITO on 14th Feb., 1977 wrote to the appellant stating that the money borrowed from M/s V.D. Mehta Co., could not have been advanced to M/s Jayalakshmi Co., and he proposed to withdraw the interest allowed as a deduction by reopening the assessments under s. 147(B). Having written to the appellant that he intends to reopen the assessments under s. 147(B) on the ground that the money borrowed from M/s V.D. Mehta Co., was not advanced to M/s Jayalakshmi Co. If the ITO later wanted to rectify the assessment orders and disallow the interest on the ground that the money was not ....