1972 (1) TMI 8

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....ection 66(1) of the Income-tax Act, 1922, and the question that has been referred for our opinion is : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was no justification for disallowing interest payment of Rs. 12,413 for the assessment year 1960-61?" The assessee is a private limited company carrying on money-lending business....

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....ction 10(2)(iii) of the Act. The reason given by the Income-tax Officer for disallowing this amount was that the interest charged on the lending was at a lower rate than that on the borrowing and that the lending was in favour of persons who were intimately connected with the assessee. This cannot be a ground for disallowing the interest. Once it is found that the capital was borrowed for the purp....