COMMISSIONER OF INCOME TAX Vs. C JOHN RAJAN

JUDGEMENT

(1.) THE following question of law is referred to this court as per the directions issued in the judgment dated 27 -3 -1998 in O.P. No. 16499/1997 :

(2.) THE brief facts necessary for the decision on the above question of law is as follows : The respondent -assessee is a doctor. For the assessment year 1990 -91, the assessee declared interest on bank deposits of Rs. 44,915 and claimed deduction of interest payable to bank on loans taken on the security of the fixed deposits amounting to Rs. 45,297. The assessing officer while completing the assessment under section 143(1)(a) of the Income Tax Act, 1961, did not allow the interest paid to the bank, and also rejected the application filed by the assessee under section 154 of the Act. However, in appeal by the assessee, the Deputy Commissioner (Appeals) held that only the net interest on the fixed deposits was assessable in the hands of the assessee. Accordingly, he directed the assessing officer to set -off the interest payable on the loans against the interest on the fixed deposits. In appeal by the department, the Tribunal confirmed the order of the Deputy Commissioner (Appeals) relying on the decision of the Andhra Pradesh High Court in the case of CIT v. Andhra Farm Chemicals Corpn. : [1988]171ITR660(AP) .