COMMISSIONER OF INCOME TAX Vs. MINERVA DYEING COMPANY

JUDGEMENT

(1.) THIS is a reference under section 256(1) of the Income -tax Act, 1961, at the instance of the Revenue to answer the following question of law :

(2.) THE relevant assessment year is 1978 -79. During the relevant period, the assessee -firm had received Rs. 5,403 as interest from one of its partners, namely, Kantilal. The firm also had paid interest to Kantilal on the credit balance in his capital account. The assessee offered to pay tax on the difference between the two amounts which was Rs. 2,145. The Income -tax Officer, however, rejected that claim on the basis of section 40(b) of the Act. The Appellate Assistant Commissioner, however, upheld the assessees contention. The Tribunal has taken the same view. Hence, this reference at the instance the Revenue.

(3.) CONSEQUENTLY , the reference is answered against the Revenue and in favour of the assessee by holding that the Tribunals view is justified.