COMMISSIONER OF INCOME TAX Vs. JOLLY AND CO

JUDGEMENT

(1.) THIS appeal by the Revenue under Section 260A of the Income -tax Act, 1961 (for short 'the Act'), is directed against the order, dated October 12, 2001, passed by the Income -tax Appellate Tribunal, Delhi Bench 'B', New Delhi (for short 'the Tribunal'), in I. T. A. No. 5425/Delhi of 1995.

(2.) BRIEFLY stated, the material facts are : During the course of assessment proceedings pertaining to the assessment year 1984 -85, the Assessing Officer noticed that the assessed had claimed as expenditure the amount of interest of Rs. 10,25,953 paid to one Jolly Bawa and Associates on the loans raised from them. He was of the view that since under an agreement, dated October 1, 1981, between the assessed and Jolly Bawa and Associates, the latter was to arrange the necessary funds for construction of cinema and for other business activities, the assessed was not required to pay any interest, and, thereforee, the said payment towards interest could not be allowed as business expenditure. Rejecting the stand of the assessed that the said agreement had been varied subsequently, the Assessing Officer disallowed the said expenditure. It appears that against the disallowance the matter was taken up in further appeals and vide order dated March 17, 1992, the Income -tax Appellate Tribunal (in I. T. As. Nos. 594/Delhi of 1989 and 1438/Delhi of 1989) set aside the said disallowance and remanded the case back to the Assessing Officer to reconsider the issue in the light of certain directions contained in the said order. On reconsideration, the Assessing Officer took the same view, which had been taken earlier.

(3.) THE Revenue took the matter in further appeal to the Tribunal. The Tribunal after noticing the movement of the loan amount inter se between the assessed, Jolly Bawa and Associates and one Laxmi Chand Bhagyaji, has upheld the view taken by the Commissioner (Appeals). The Tribunal has noted that there is no dispute between the parties that certain changes were made in the aforenoted agreement by mutual consent. Hence, the present appeal.