1992 (7) TMI 42 - HC - Income Tax

Summary

Issues involved: The judgment involves three questions referred by the Income-tax Appellate Tribunal, Allahabad Bench, for the assessment year 1972-73 under section 256(2) of the Income-tax Act, 1961.

Question No. 1: The assessee paid interest on late payment of cane purchase tax, which was disallowed. The court considered a similar case in a previous judgment and ruled in favor of the assessee. Therefore, the court answered question No. 1 in favor of the assessee and against the Revenue.

Question No. 2: The assessee-company diverted part of the bank overdraft to directors and firms in which the directors had substantial interest, without charging interest. The assessing authority disallowed the interest paid by the company to the bank for non-business purposes. A similar case was decided against the assessee in a previous assessment year. Following that decision, the court answered question No. 2 in favor of the Revenue and against the assessee.

Question No. 3: Since question No. 3 is interconnected with question No. 2, which was decided in favor of the Revenue, no separate answer was provided for question No. 3.

The reference was answered accordingly with no order as to costs.