MATHEW JOSEPH, PROP. PALM FIBRES & YARN TRADING CO. Vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE

JUDGEMENT

(1.) Whether the income obtained to the assessee by way of interest, by virtue of the amount advanced to a sister concern (admittedly an income from other sources coming within the purview of Section 56 of the Income tax Act) is liable to be set off against the interest paid by the assessee to his bankers in respect of a loan obtained for the export business (packing credit facility) as an eligible deduction under Section 57(iii) of the said Act is the point to be considered and answered by this Court.

(2.) On losing the battle before the Assessing Authority, the first Appellate Authority and also before the Income Tax Appellate Tribunal, the assessee has come up before this Court, raising two questions as substantial questions of law, in the following terms:

(3.) The appeal preferred under Section 260A of the Income Tax Act was admitted by this Court on 24.05.2010 framing the following substantial question of law: