1981 (4) TMI 35

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....his is a reference under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as " the Act "), referring the following question of law : " Whether, on the particular facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 13,020 was not disallowable from and out of the assessee's claim for interest payment in respect of its borrowings ? " ....

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....count of interest to the extent of Rs. 13,020, which was disallowed on the aforesaid reasoning of the ITO. The AAC upheld this finding of the ITO and, according to him, there was no explanation for not charging interest on the debit balance of the partners. The Tribunal, however, allowed the assessee's appeal and the disallowance was deleted. The mere fact that there was no plausible explanatio....

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....n I T. Act, 1922, was rejected. The decision of the Bombay High Court in Bai Bhuriben Lallubhai v. CIT [1956] 29 ITR 543, was rightly distinguished. The reasoning given even in Gopikrishna Muralidhar's case [1963] 47 ITR 469 (AP), with which we agree, equally applies to the instant case. In our opinion, therefore, no exception could be taken to the view taken by the Tribunal. That being so, we ....