CIT Vs. LAXMI DAL MILLS

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal has referred the following questions of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court: '1. Whether the Tribunal was legally justified in holding that the interest paid by the firm to the HUFs of the partners is to be allowed under section 40(b) of the Income Tax Act, 1961 placing reliance in the case of Ram Lal & Sons. v. CIT : [1980]124ITR157(All) , in the facts and circumstances of the present case?

(2.) WHETHER the Tribunal is legally correct in allowing some part of interest claimed by the assessee while the assessee has failed to charge any interest on the amounts advanced by it?' 2. The reference relates to the assessment year 1983 -84.

(3.) THE firm had not charged interest on the loans advanced to M/s. Shiv Refiners. There was an opening balance of Rs. 54,750 in the said account. The Income Tax Officer had worked out the interest @) 15 per cent amounting to Rs. 5,213 and added it to the income of the respondent -firm.