MOHAMMAD HANEEF Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference is under S.66(2) of the Indian Income Tax Act, 1922 and concerns the assessment years 1950-51 to 1954-55. The questions referred are the following:-

(2.) In the light of the first question referred, the history of the business, soon after the manufacture of tincans commenced, is relevant. The Tribunal expressed itself thus:

(3.) As for the second question referred, the department has a case and the statement of the case has also disclosed in Para.12, that part of the borrowing from the bank, was on account of personal drawings. This cannot be overlooked, although the question referred makes no mention of it. The tribunal has not stated, what is the amount of such personal drawings. The amount of interest to be deducted can only be, that which is related to the borrowing on account of the business. In this view, we can answer the second question only as follows: the disallowance of the amounts of interest for the years in question attributable to the borrowings as on the 1st January, 1949, in respect of the venture on cashew-nuts is not lawful; in other words, the amounts by way of interest accrued during the years on that part of the borrowing in respect of the venture on cashew-nuts have to be deducted.