1992 (7) TMI 51

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....pplication under section 256(2) of the Income-tax Act, 1961 (for short, "the Act " ), the Commissioner of Income-tax has desired that the Income-tax Appellate Tribunal, Bench 'B', New Delhi, be directed to refer the following question for the opinion of this court " Whether, on the facts and in the circumstances of the case, the Tribunal was in law justified in holding that the liability of int....

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....isallowed the same on the grounds, inter alia, that, as the assessee had not maintained books of account, it was not entitled to take the benefit of the mercantile system of accounting and the claim for deduction could not be allowed on accrual basis. Another ground given was that the assessee had advanced certain interest-free loans to its sister concerns and thereby used the borrowing indirectly....

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....sioner was upheld by the Income-tax Appellate Tribunal, while dismissing the second appeal filed at the instance of the Revenue. The reference application under section 256(1) of the Act having been declined by the Income-tax Appellate Tribunal, this application has been filed seeking a direction as stated earlier. Now, sub-section (1) of section 24 of the Act, vide its clauses (i) to (x), prov....

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....y, Rs. 73,424, was clearly an admissible deduction in computing the taxable income of the assessee. Once the nexus between the borrowed capital and the acquisition, construction, etc., of property is established and proved, the claim for deduction of interest on borrowing cannot be resisted. It may be noticed that section 24(1)(vi) permits deduction of the interest "payable" on borrowed capital ut....