9911796707
TMI Blog1969 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ril, 1928. Under the terms of the said decree it was provided that the said Chandmari Road property was to belong to Smt. Anardeyi Sethani and she on her part was to make a payment of the sum of Rs. 8,61,000 to the plaintiff in that suit. There was a stipulation of payment of compound interest on the unpaid amount at Rs. 6 314 per cent. with yearly interest. It was further provided that Rs. 4,25,000 was to be paid on the execution of the terms of settlement and then monthly instalments of Rs. 35,000 for 17 months and the balance was to be paid on the 18th month. The terms of the compromise were not adhered to and there were defaults of payments. After making the last payment on 19th February, 1965, there still remained an outstanding of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1922, the amount of interest allowable was Rs. 18,000 or Rs. 38,221 ? " In our opinion, for the purpose of answering this question it is important to bear in mind that what' is allowed is interest on " such capital ". The expression " such capital " in the last part of clause (iv) of section 9(1) is descriptive of the capital employed for the acquisition or con. struction or repair or renewal or reconstruction of the property. It is this capital which is borrowed capital which has been indicated by the expression " such capital ". What the assessee is claiming here is interest on that capital plus the interest on interest that has remained unpaid. In our opinion that would not be interest payable on "such capital". It would be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is it interest on something else? If it is interest on something else then in our opinion it does not come within the provision for allowance under clause (iv) of section 9(1) of the said Act. It is clear that in this case what has happened is that the remaining unpaid portion of interest has been capitalized and what is being claimed is interest on that. So, even though it is interest, it is not interest on "such capital". In that view of the matter we are of the opinion that the decision arrived at by the Tribunal was right and the question must be answered by saying that the interest allowable was Rs. 18,000 and not Rs. 38,221. The assessee will pay the costs of this reference.
DEB J.-I agree. X X X X Extracts X X X X X X X X Extracts X X X X
|
