1998 (7) TMI 74

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....ence under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), at the instance of the assessee, the Income-tax Appellate Tribunal (the "Tribunal"), has referred the following question of law to this court for opinion : "Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction of interest of Rs. 76,182 for the assessment year 1977-78, Rs. 95....

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....f the amount of interest paid by him in the computation of his income under section 80V of the Act. This claim of the assessee was rejected by the Income-tax Officer on the ground that the claim of the assessee for deduction of interest on such loan was not permissible under section 80V of the Act because the interest claimed by the assessee was not interest paid on moneys borrowed by the assessee....

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....975, with effect from April 1, 1976, to provide for deduction of interest on any money borrowed for payment of any tax under the Act. It reads : "80V. Deduction of interest on moneys borrowed to pay taxes.---In computing the total income of an assessee, there shall be allowed by way of deduction any interest paid by him in the previous year on any money borrowed for the payment of any tax due f....

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....orrowed some money during the years 1961 to 1970 by way of interest-free loan for payment of income-tax. No interest was payable on the money so borrowed by the assessee for payment of income-tax. The loan obtained by the assessee during the previous year relevant to the assessment year 1976-77 was for the purpose of repaying the loans obtained earlier. The assessee claims deduction of the interes....