AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
1961 (11) TMI 68
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reference raises the following question, which is a very simple one: "Whether, in the particular facts of the case, the amount of Rs. 13,500 is properly disallowable from and out of the assessee's claim for interest payment in respect of its borrowals in the year of account ?" The assessee is a Hindu undivided family carrying on business on an extensive scale with a capital of nea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion. On appeal, the Appellate Assistant Commissioner reached the conclusion that the assessee could claim this deduction as it was the interest paid on capital borrowed for the purpose of business. This is what the Commissioner says : "Out of Rs. 93,611, interest paid on capital borrowed, Rs. 13,500, was disallowed as interest on amounts withdrawn specifically to meet personal expenses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted substantial capital in the business, it had every right to withdraw sums of money even out of its borrowings. However, on the request of the Commissioner, the Tribunal referred the question set out above under section 66(1) of the Indian Income-tax Act. It is urged on behalf of the department by Sri Kondiah that the interest paid on any borrowing made for the personal use of the family w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he family. The assessee drew out from time to time various sums of money aggregating to Rs. 1,77,984 from the business. It is not a case where any particular sum purporting to be borrowed on behalf of the business was spent for household expenses. This is a case where the loans were taken for carrying on the business but the family used to withdraw some amounts from the business whenever occasions....