COMMISSIONER OF INCOME TAX Vs. GAYATRI DEVI BIRLA

JUDGEMENT

(1.) THIS is a reference under Section 256(2) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax on the direction of the High Court. The Tribunal has referred the following question of law for answer by this court :

(2.) THE facts giving rise to this reference are that the assessee is a partner in the firm, Gwalior Agencies. THE assessment years involved are 1982-83 and 1983-84. Certain amounts were credited to the account of the asses-see in the books of the aforesaid firm for which she was entitled to interest. THE books of account carried another account in her name in which her drawings were debited. THE firm had been crediting interest to the first account which had a credit balance. THE firm had also been debiting interest to the second account which had a debit balance.

(3.) AGAINST the order of the Appellate Assistant Commissioner, the Revenue came up in appeal before the Tribunal. Following its orders for the earlier assessment years, the departmental appeals were dismissed by the Tribunal. Thereafter an application was made by the Revenue for making a reference to this court. The application of the Revenue was rejected by the Tribunal. Hence, an application under Section 256(2) of the Income-tax Act, 1961, was made to this court and this court called for a reference of the aforesaid question of law for answer by this court. It is not necessary to go into detail and suffice it to say that the question under reference has already been answered by the Supreme Court in favour of the assessee and it has been observed in the case of Keshavji Ravji and Co. v. CIT [1990] 183 ITR 1 (SC) as under (headnote) :