STANMORE ESTATE Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THIS is yet another case which raises the issue regarding the applicability and scope of ss. 5(e) and 5(k) of the Tamil Nadu Agrl. IT Act, 1955. The assessment year in question is 1983 -84. The assessee claimed a sum of Rs. 1,25,000 as permissible deduction under S. 5(k) and Rs. 2,18,461 under S. 5(e) of the Act. Out of the sums so claimed, a sum of Rs. 2,26,939 has been disallowed.

(2.) THE Tribunal has held that interest can only be claimed under S. 5(k); that merely because a part of the amount claimed as interest cannot be allowed under S. 5(k), the amount so disallowed is not necessarily to be allowed under s. 5(e). We agree with that statement of law.

(3.) WE had occasion to consider the same question in Tax Case No. 700 of 1986 wherein we have taken the view that the assessing authority must apply its mind to the purposes for which the borrowing was effected and the manner in which the amount so borrowed was utilised, for deciding as to whether the interest paid on that borrowing is deductible under S. 5(k) or S. 5(e) or not at all.