COMMISSIONER OF INCOME TAX Vs. C L BAJORIA

JUDGEMENT

(1.) This is a reference under Section 256(1) of the I.T. Act, 1961, It relates to the assessment of 1966-67 and the question before us is as follows :

(2.) The assessee is au HUF. The assessee borrowed Rs. 79,609 and invested the said amount with M/s. Soorajmull Nagarmull, a firm in which the assessee was a partner. M/s. Soorajmull Nagarmull utilised this amount for payment of its taxes.

(3.) In the assessment proceedings the ITO held that the interest paid by the assessee on the aforesaid amount was not a deductible expenditure on the ground that M/s. Soorajmull Nagarmull had utilised this amount for payment of its taxes.