ASIAN AGRICO INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Ahmedabad Bench 'A', has referred under section 256(2) of the Income -tax Act, 1961, the following questions for the opinion of this court :

(2.) THE relevant assessment year is 1972 -73. The assessee -firm filed a return of income declaring its total income at Rs. 63,830 on July 19, 1972. Copies of the trading account, the profit and loss account, etc., were filed along with the return. While scrutinising the books of the assessee, the Income -tax Officer found that the total amount of interest credited to the accounts of the partners of the firm was Rs. 66,519.

(3.) AT the hearing of this reference, it was urged on behalf of the assessee that the Explanation to section 271(1)(c) was not attracted in the instant case because on its true construction the total income returned by the assessee would not be less than 80 per cent. of the total income assessed as reduced by the expenditure incurred bona fide by the assessee as envisaged in the said Explanation. The Explanation to section 271(1)(c) as it stood at the relevant time read as under :