COMMISSIONER OF INCOME TAX Vs. H P LOHIA

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the Tribunal has prepared the statement of case with the following questions of law relating to the assessment years 1981-82 and 1982-83 :

(2.) The additional question of law for the assessment year 1981-82 is as follows :

(3.) The facts pertaining to all the questions are that the assessee paid interest of Rs. 11,36,592 and Rs. 15,41,844 in the assessment years 1981-82 and 1982-83, respectively, on the amounts borrowed by him earlier. The Income-tax Officer found that at the same time he had a good number of loan accounts as well as investment accounts by way of loans and others. The investment in the form of loans were always shown as a part of investment under the head "Loans". During the year 1979-80 relevant to the assessment year 1980-81, the assessee wrote off the loans of Rs. 12,08,459.78 due from Messrs. East India Electricals and Rs. 3,55,217.47 due from Messrs. New India Electricals (Cal) Pvt. Ltd. on the ground that the debtor-companies went into liquidation under order dated January 18, 1979, of this court. This act of writing off of the loans was upheld by the Commissioner of Income-tax (Appeals) in the quantum appeals.