1999 (4) TMI 71

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.... section 80V of the Income-tax Act, 1961, of Rs. 58,000 for the assessment year 1976-77, Rs. 44,500 for the assessment year 1977-78 and Rs. 55,445 for the assessment year 1978-79 ?" The assessee is an individual. He was a partner of the firm, M. C. Ghia and Co. His personal account in the firm had been treated somewhat like a current account. His income was credited in that account, similarly, his drawing, payment of taxes, etc., were debited in that account. The partnership deed did not stipulate that the partners would be debited with interest. Nevertheless, interest was charged on the debit balances. The interest debited in the account of the assessee was Rs. 1,47,257 for the assessment year 1976-77, Rs. 1,04,552 for the assessment ye....

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.... was having substantial income in all these years and there was nothing to show that the tax payments were made from the withdrawals, He also agreed with the Income-tax Officer that the allowance under section 80V of the Act would be limited only to such interest on the borrowing made for payment of taxes after April 1, 1976, when this relevant section came into operation. The assessee appealed to the Income-tax Appellate Tribunal ("the Tribunal"). The Tribunal did not agree with the opinion of the Commissioner of Income-tax (Appeals) that the interest on borrowings made for payment of taxes after coming into force of section 80V of the Act only was allowable as a deduction under that section. In other words, according to the Tribunal, sect....

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.... submitted that interest paid on monies borrowed by the assessee in this case cannot be allowed as a deduction under section 80V of the Act in the absence of a specific finding that the borrowing was for the purpose of payment of taxes under the Act. He further submitted that this section provides for deduction of interest only on monies borrowed for the payment of any tax due from the assessee under the Act and not on borrowed money utilised for the payment of tax. Reliance was placed in support of this contention on the decision of this court in Hindustan Cocoa Products Ltd. v. CIT [1999] 236 ITR 140. Ms. V. B. Patel, learned counsel for the assessee, on the other hand, submitted that the benefit of this section is also available in respe....