COMMISSIONER OF INCOME TAX Vs. P K NARAYANAN

JUDGEMENT

(1.) THE prayer for reference under Section 256(1) of the Income-tax Act, 1961 (for short "the Act"), has been turned down by the Income-tax Appellate Tribunal, Cochin Bench (in short "the Tribunal"), and hence this application under Section 256(2) of the Act has been filed.

(2.) THE dispute relates to the assessment year 1990-91. Interest claimed in respect of certain credits amounting to Rs. 16,08,000 was disallowed by the Assessing Officer on the ground that it was not genuine. Total interest claimed was Rs. 1,50,750. THE Assessing Officer was of the view that the alleged creditors did not respond to the notices issued and, therefore, they were non-existent for all practical purposes. THE Commissioner of Income-tax (Appeals), held that the genuineness of the 29 creditors was accepted by the Assessing Officer for the earlier years. That being the position, it was not open to the Assessing Officer to turn around and say that the persons from whom loans were allegedly taken were non-existent persons for the purpose of payment of interest. In appeal before the Tribunal, the stand of the Revenue was that the Assessing Officer having found that the persons were not genuine, the claim of interest ought not to have been allowed. THE Tribunal observed that the genuineness of the creditors was not disputed and, therefore, the claim was to be allowed.

(3.) THE original petition is accordingly dismissed.