COMMISSIONER OF INCOME-TAX Vs. ARVINDBHAI NAROTTAMBHAI

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Ahmedabad Bench 'A', has referred the following question under Section 256(1) of the Income -tax Act, 1961 ('the Act'), at the instance of the Commissioner of Income -tax (Appeals): Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing interest on borrowed funds at the rate of 4 per cent, and not at the rate of 7.5 per cent, for acquisition of preference shares?

(2.) THE assessment year is 1986 -87. The relevant accounting period is samvat year 2041. The assessee claimed deduction of interest paid on borrowing of Rs. 17 lakhs and the rate of interest was 7.5 per cent. The Assessing Officer disallowed the same. The assessee succeeded before the Commissioner (Appeals). In the Revenue's appeal the Tribunal, vide order dated January 31, 1997, held that deduction of the amount worked out by applying 4 per cent., rate of interest would be allowable while disallowing the balance 3.5 per cent. For adopting this view, the Tribunal has placed reliance on its own order in the case of Shrenik Kasturbhai (HUF).

(3.) THUS , it becomes apparent that the finding of the Tribunal in the case of Shrenik Kasturbhai (HUF) is that interest payment worked out by applying the rate of 4 per cent, was reasonable and the said finding has been accepted by both the sides. In the circumstances, it is not necessary to set out the other contentions and facts. The impugned order of the Tribunal does not merit interference in the aforesaid fact situation.