2017 (1) TMI 1439

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Income Tax Act, 1961 (hereinafter referred to as "Act, 1961") have arisen from judgment and order dated 11.04.2005 passed by Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (hereinafter referred to as "Tribunal") and were admitted on the following substantial questions of law: "I. Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal is justified in holding that the assessee's claim for deduction of interest was allowable in full, despite the fact that the assessee was unable to disprove the use of borrowed funds for non business purposes. II. Whether on the fact and in the circumstances of the case the ratio of decision of the Hon'ble Allahabad High Court in cases of CIT Vs.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ter Concern M/s. J.P. Industries for non-business purposes. Tribunal found that on the same issues between the same parties for Assessment Year 1990-91, Revenue has conceded the matter in favour of Assessee in Income Tax Appeal No. 1288/Alld/1993 and the issue was covered by the said judgment. That being so and the matter has already stood finally determined between the parties in respect to earlier Assessment Year, we find no error on the part of Tribunal in following the said view and dismissing Revenue's appeal challenging the aforesaid relief granted by CIT(A). Question-1, therefore, is answered accordingly. 5. So far as Question-2 is concerned, we find that both the decisions are not applicable to the case in hand and do not help ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... directors/shareholders. It cannot be said that it is expedient in the interest of business or is laid out for the purpose of the business of the assessee. It is not even a case where employees of the company are being lent some small amounts at a lower rate of interest with a view to keep them happy and satisfied. The amount of interest paid each year payable on account of the loans to directors is very substantial and this fact cannot be glossed over by saying that the amount is not substantial in each of the years. It must be remembered that, in pursuance of the compromise referred to above, the limit of amounts to be lent to the directors/shareholders was substantially raised while, at the same time, drastically reducing the rate of int....