KESHRICHAND JAISUKHLAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this judgment and order, both the references made under S. 256(2) of the IT Act, 1961, hereinafter referred to as (the "Act"), are being disposed of.

(2.) THE identical question to be answered are as follows :

(3.) QUESTION No. 2 is relatable to the claim of deduction of interest on unsecured loan. The assessee -firm claimed deduction of Rs. 3,41,600 on unsecured loan of Rs. 26,30,919 for the year 1984 -85. The AO noted that the assessee -firm made investment of Rs. 2,59,325 in the said year in the house property belonging to Keshrichand Jaisukhlal, HUF. According to the AO, the interest related to the said investment of Rs. 2,59,325 should have been debited to Keshrichand Jaisukhlal. The AO added Rs. 38,898 as the interest on the aforesaid amount at the rate of 15 per cent to the total income of the assessee -firm. The addition of Rs. 38,898 by way of interest was deleted by the CIT(A). On further appeal, the learned Tribunal came to the conclusion that the addition was wrongly deleted by the CIT(A) and reversed the order and restored the assessment made by the AO.