COMMISSIONER OF INCOME TAX Vs. KESHO RAM

JUDGEMENT

(1.) BY this application under Section 256(2) of the Income-tax Act, 1961, the Commissioner of Income-tax, Meerut, prays that the Income-tax Appellate Tribunal, Delhi, be directed to draw up a statement of the case and refer the aforementioned question stated to be of law arising out of the Tribunal's order dated October 13, 1994, passed in ITA No. 1377(Delhi) of 1990 for the assessment year 1988-89 to be referred for the opinion of this court :

(2.) WE have heard Sri A. N. Mahajan, learned counsel for the applicant, and Sri Rajesh Kumar, learned counsel for the opposite party.

(3.) AS regards the judgment of the Madhya Pradesh High Court, a perusal thereof would show that it has categorically been held that a member of an association of persons, who advances money to the association for the purpose of its business is in the position of a creditor of the association and the interest paid by the association to him is legitimate deduction under Section 10(2)(iii) of the Indian Income-tax Act, 1922, in computing the profits of its business. Therefore, the Tribunal was right in applying this decision and the answer to this aspect of the question is self-evident.