1993 (3) TMI 75

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....of the share capital in the firm, Messrs. United Film Exhibitors. Both the petitioners had filed returns claiming deduction of Rs. 6,000 under section 80L of the Act in respect of their interest from deposits in the bank. The assessments were completed for the year 1983-84 by exhibit P-2 orders without granting the benefit. On enquiry they knew that they were not granted the benefit for the reason that they had to pay interest to the bank on the loans on the fixed deposits and, therefore, there was no scope for granting the benefit under section 80L. The petitioners filed revision petitions, exhibit P-4, before the Commissioner of Income-tax pointing out that the interest paid by them on the loans taken from the bank for contributing their ....

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....ce that resulted in a negative figure, no deduction under section 80L could be allowed. It cannot be disputed that interest paid on the amounts borrowed from the bank for the purpose of contributing their share capital is liable to be deducted from the petitioners' income as an admissible item of expenditure under section 37 of the Act. In fact, it was so held in the appeals relating to the year 1982-83 by the order, exhibit P-3. In that order, it was held that the loan was taken for the purpose of contributing the share capital of the petitioners to the firm. The contention of the Revenue incidentally raised that there is no evidence to show that the loans had been taken for the purpose of contributing their share capital to the firm is, ....