TaxTMI 
TaxTMI 
1998 (11) TMI 115
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.... DR. B. P. SARAF J.---By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following questions of law to this court for opinion at the instance of the assessee : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest paid on borrowed monies by way of public deposits is ....
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....to him, the real controversy is whether the assessee is entitled to deduction under section 80V of the Income-tax Act, 1961 ("the Act"), of the interest paid by it on money borrowed by it by way of public deposits which can be attributed to user of such borrowed money for payment of taxes. He submits that the amount borrowed in the form of public deposits by the assessee was utilised for payment o....
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.... the payment of any tax due from him under this Act." This section was inserted in the Act by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, and deleted by the Finance Act, 1985, with effect from April 1, 1986. It is clear from a plain reading of the above section that it permits deduction in respect of interest paid by the assessee on any money borrowed for payment of....
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....d that it was allowable as a deduction in computing income from business and that section 40A(8) would be applicable to such expenditure. The claim of the assessee for deduction under section 80V of the Act of the proportionate interest attributable to the amount of borrowed money used by the assessee for the purpose of payment of income-tax is, therefore, not tenable. We are supported in our a....