1993 (8) TMI 64

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....Heard learned counsel for the parties. The present reference arises under section 256(1) of the Income-tax Act, 1961, and the Tribunal has referred the following question to be answered by this court which is quoted as under : "Whether, on the facts and in the circumstances of the case, the learned Tribunal was legally justified in holding that the payment of interest amounting to Rs. 97,290....

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....or the purpose of carrying on the assessee's business and as such it was allowable in terms of clause (iii) of sub-section (1) of section 36 of the Income-tax Act, 1961. The assessee relied on the decision reported in the case of India Cements Ltd. [1966] 60 ITR 52 (SC), while the Revenue relied on the decision reported in the case of Ritz Continental Hotels Ltd. [1978] 114 ITR 554 (Cal). The T....

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....ose of sub-section (1) of section 36 in that it has been carrying on the business and that it is for the purpose of business that it borrowed the capital in question. That the capital in the present case has been borrowed for its business is not in doubt. Accordingly, we feel that the assessee's contention is correct and the disallowance of interest on the facts of the present case was not justifi....

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....een laid down by the Supreme Court while interpreting the provisions of section 10(2)(xv) of the Indian Income-tax Act, 1922, in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52 (SC). On the other hand, the decision relied on behalf of the Revenue is reported in Ritz Continental Hotels Ltd. v. CIT [1978] 114 ITR 554 (Cal), but the same is not applicable to the facts and circumstances of the ....