COMMISSIONER OF INCOME TAX Vs. GOPIKRISHNA MURALIDHAR

JUDGEMENT

(1.) THIS reference raises the business which is a very simple one :

(2.) THE assessee is a Hindu undivided family carrying on business on an extensive scale with a capital of nearly Rs. 20,00,000 (twenty lakhs). During the year ended 9th November, 1950, the assessee made large borrowals for purpose of his business and paid interest amounting to Rs. 93,611 on these borrowals. In the course of that year, the assessee withdrew from the business from time to time Rs. 1,77,984 for his personal expenses. THE Income-tax Officer disallowed a sum of Rs. 13,500 representing the interest upon Rs. 1,77,984 since he thought that the borrowals amounting to Rs. 1,77,984 were made in the name of the business for his personal purposes. According to him, money was withdrawn from the books of account of meet the personal expenditure of the assessee and, as this sum of money was not actually used for the business, the interest paid thereon could not be allowed as permissible deduction.

(3.) HOWEVER, on the request of the Commissioner, the Tribunal referred commission set out above under section 66(1) of the Indian Income-tax Act.