COMMISSIONER OF INCOME TAX Vs. S S NARAYANAN

JUDGEMENT

(1.) AS per the order of this court in T.C.P. No. 505 of 1977 under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), this court directed the Income-tax Appellate Tribunal to draw up a statement of the case and refer the question of law. Accordingly, the following question is referred to this court"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in allowing the deduction of a sum of Rs. 9, 148.50 representing interest paid to the Government of Tamil Nadu for allotment of an industrial unit under section 37 of the Income-tax Act, 1961, for the assessment year 1973-74 ?" * The facts of the case are as follows : The assessee is an individual and the matter relates to the assessment year 1973-74 the corresponding accounting year being the period from April 1, 1972 to March 31, 1973.

(2.) THE assessee carries on the business of manufacture and sale of industrial thermostats under the name and style, Labequip Instrument Corporation. He commenced the said business in 1968 and carried it on in a place in Triplicane High Road, Madras. THE Government of Tamil Nadu formed a functional industrial estate for instruments, electronics at Adyar, Madras.

(3.) THE Supreme Court did not accept the contention. THE court pointed out that the expenditure in question had been incurred by the assessee therein after the commencement of the business.