2000 (9) TMI 44

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....he questions of law are referred to us at the instance of the Revenue under section 256(1) of the Income-tax Act, 1961. The questions of law referred are as follows : "1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in deleting the disallowance of Rs. 6,72,000 out of the claim of interest on borrowings ? 2. Whether, on the facts and in the....

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....cords, the Assessing Officer took the view that the firm is not in a position to divert funds to its partners without the deposit collected has yielded a total amount of Rs. 7,46,143 by way of interest on borrowed funds. Hence, he disallowed an amount of Rs. 6,72,000 being interest on funds diverted by partners. The appeal filed by the assessee was allowed and against that before the Tribunal, the....

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.... British Paints India Ltd. [1991] 188 ITR 44 (SC), to bring the point that the Assessing Officer can under the proviso to section 145 look into the accounts. The Assessing Officer can even where the accounts are correct and complete to the satisfaction of the Assessing Officer but the method employed is such that, in the opinion of the Assessing Officer, the income cannot properly be deduced there....

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.... Further, counsel for the Revenue on the basis of the decision In CIT v. A. Krishnaswami Mudaliar [1964] 53 ITR 122 (SC); Sundaram and Co. Ltd. v. CIT [1959] 36 ITR 162 (Mad) and CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC) contends that even if in the same system of accounting, the Assessing Officer can exercise the power under the proviso when he finds that the method of accounting is....