COMMISSIONER OF INCOME TAX Vs. WINTEX MILLS LIMITED

JUDGEMENT

(1.) THE following question of law has been referred for the opinion of this Court :

(2.) FOR the asst. year 1978 79, the assessee debited interest of Rs. 13,18,829, against which it had received interest of Rs. 1,38,205. The ITO disallowed interest under S. 40A(8) of the IT Act, 1961 (hereinafter referred to as "the Act") on the gross amount of interest without deducting interest received. In appeal, the CIT(A) upheld the decision of the ITO. In further appeal by the assessee, the Tribunal held that for determining the disallowance, the net amount of interest should be considered.

(3.) THOUGH no direct decision under S. 40A(8) of the Act is brought to our notice, there is a decision of the Honourable Supreme Court in Keshavji Ravji & Co. Etc. Etc. vs. CIT (1990) 82 CTR (SC) 123 : (1990) 183 ITR 1 (SC) : TC 33R.336 on interpretation of S. 40(b) of the Act. Sec. 40A and s. 40(b) both contain non obstante clause. Sub s. (8) of S. 40A, as stood then, read as under :