BALDEV RAMNARAYAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Bangalore Bench, has referred the following question of law under section 256(1) of the Income -tax Act, 1961, for the opinion of this court :

(2.) THE assessee is a partner in several firms and his main income is in the form of profits from the firms in which he is a partner. For the assessment year 1974 -75, he claimed deduction of a sum of Rs. 10,932 being interest paid to Ramnarayan Girdhardas and Co., Bangalore, a firm, in which the assessee is a partner. The interest was paid on the debit balance arising out of the withdrawals from the said firm. The Income -tax Officer disallowed the said claim on the ground that it was not incurred for the purpose of business and the withdrawals were only for meeting the personal expenses of the assessee, i.e., for payment of income -tax, insurance premium, etc.

(3.) THE Tribunal held that the withdrawals by the assessee were for personal expenses and the claim for allowance in respect of the said expenses was, therefore, rightly disallowed by the Income -tax Officer. The Tribunal observed that the borrowing of the money by the assessee was not for the purpose of his business and it could not be considered as an expenditure laid out wholly and exclusively for the purpose of the business as required under section 37 of the Income -tax Act.