COMMISSIONER OF INCOME TAX Vs. CHICKANNA SILK HOUSE

JUDGEMENT

(1.) THE following questions have been referred for the opinion of this court at the instance of the Revenue under section 256(2) of the Indian Income-tax Act, 1961 (hereinafter referred to as "the Act").

(2.) FOR the assessment year 1964-65 :

(3.) IN respect of the assessment year 1966-67, the assessee claimed that the interest paid on the borrowings from the above mentioned creditors totalling to Rs. 9,590 should be allowed. Since in the earlier assessment for the assessment year 1964-65, the credits in the names of the aforesaid parties were held to be fabricated, the INcome-tax Officer disallowed the interest payments. Even in respect of this assessment year, the INcome-tax Officer directed initiation of action under sections 271(1)(a) and 271(1)(c) of the Act. Aggrieved by this, the assessee preferred an appeal to the Appellate Assistant Commissioner contending that the interest payments ought not to have been disallowed. That was not accepted by the Appellate Assistant Commissioner who upheld the disallowance of the interest payment totalling to Rs. 9,590.